During March, the production department of a process operations system completed

Question

During March, the production department of a process operations system completed and transferred to finished goods 25,000 units that were in process at the beginning of March and 110,000 units that were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. The production department incurred direct labor cost of $ 578,900 and its beginning inventory included labor cost of $54,700. Compute the direct labor cost per equivalent units for the department using the weighted-average method. A 4.28 0 B 4.40 C 4.69 D 4.86 E 3.84

Explanation / Answer

Answer is B. $ 4.40 per equivalennt unit

Explanation:

UNITS TO ACCOUNT FOR: Beginning Work in Process units 25,000 Add: Units Started in Process 140,000 Total Units to account for: 165,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 135,000 Ending Work in Process 30,000 Total Units to be accounted for: 165,000 Equivalent Units: LABOUR % Completion Units Units started and completed 100% 135,000 Ending Work in Process 30% 9,000 Total Equivalent units 144,000 COST PER EQUIVALENT UNIT: LABOUR Cost of Beginning WIP 54,700 Cost added 578,900 Total Cost 633,600 Equivalent Units 144,000 Cost per Equivalent unit 4.4

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