6. Determining the cost per equivalent unit Aa Aa Dairy Direct is a milk process

Question

6. Determining the cost per equivalent unit Aa Aa Dairy Direct is a milk processing company that has two departments. The Processing Department pasteurizes the milk and performs other tasks such as adding vitamins. All materials are added at the beginning of the process and conversion costs are spread evenly throughout the process The Bottling Department receives the pasteurized milk and pours it into one-gallon containers that are already labeled. Dairy Direct uses a process cost system. Dairy Direct uses a FIFO assumption when preparing a cost of production report. For Dairy Direct, a unit is one gallon of milk The May direct materials and conversion cost equivalent units for Dairy Direct's Processing Department appear in the following table Equivalent Units Direct Inventory in process, beginning of period Started and completed during the period Transferred out of Processing (completed) Inventory in process, end of period Total units to be assigned costs Materials Conversion 17,300 171,000 188,300 9,800 198,100 0 171,000 171,000 15,400 186,400 The direct materials and conversion costs incurred by Dairy Direct in May appear in the following table Direct materials $354,160 Conversion costs: $64,904 133,196 Direct labor 198,100 $552,260 Factory overhead Total product costs incurred in May Calculate direct materials cost per equivalent unit and conversion cost per equivalent unit. Direct materials cost per equivalent unit Conversion cost per equivalent unit

Explanation / Answer

Answer:6

Particulars Direct material Conversion Total Cost 354160 198100 Equivalent units 186400 198100 Cost per equivalent units 1.9 1

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