A company uses a process costing system. Its Assembly Department\'s beginning in

Question

A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 55,600 units, 75% complete with respect to direct labor and overhead. The direct labor beginning inventory costs were $10,300. The department completed and transferred out 113,500 units this period. The ending inventory consists of 45,600 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $38,000 and overhead costs of $46,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is: Multiple Choice $0.24 $0.39. $0.27. $0.49. $0.42.

Explanation / Answer

Under the weighted average method,

Equivalent production for a period = Units that are completed during the period + Equivalent units in process at the end of period.

= 113,500 + (45,600*25%)

= 124,900

Total costs = Beginning cost + Current cost

= 10,300 + 38,000

= 48,300

Cost per equivalent unit = Total costs / Total equivalent units completed

= 48,300 / 124,900

= 0.39

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