Idaho Lumber Company grows, harvests, and processes timber for use in constructi

Question

Idaho Lumber Company grows, harvests, and processes timber for use in construction. The following data pertain to the firm's sawmill during November:

Work In Process, Nov 1:

Direct Material.................$65,000

Conversion......................$180,000

Costs incurred during Nov:

Direct Material................$425,000

Conversion.....................$690,000

The equivalent units of activity for November were as follows: 7,000 equivalent units of direct material and 1,740 equivalent units of conversion activity.

Calculate the cost per equivalent unit, for both direct material and conversion, during November. Use the weighted-average process costing.

Explanation / Answer

Calculate the cost per equivalent unit, for both direct material and conversion, during November. Use the weighted-average process costing.

For Direct material = (425000+65000)/7000 = $70 per unit

For Conversion = (690000+180000)/1740 = $500 per unit

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