5. ABC Company uses a process cost accounting system. The following information

Question

5. ABC Company uses a process cost accounting system. The following information is available regarding direct labor for the current year:

Goods in process on January 1st 5,500 units 80% complete

goods in process December 31st 8,800 units 40% complete

Units completed and transferred to finished goods 46,900 units

Direct labor costs during the year $266,300

(a) Calculate the equivalent units of production for direct labor for the year using weighted average. (1 point)
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent). (1 point)

You must show your work for both parts of this problem for credit. You may use the template below for part (a). Hint: Average cost per EU for part (b) should be a number between $5.10 and $5.40.

                                                                                    Percent of                   Equivalent

                                                            Units               Work Performed       Units

Units completed

Ending goods in process

Total

(b) Average cost per equivalent unit =

Explanation / Answer

a Units Percent of Work Performed Equivalent Units Units completed 46900 100% 46900 Ending goods in process 8800 40% 3520 Total 50420 b Average cost per equivalent unit =266300/50420= $5.28

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