4. Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of

Question

4. Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Alpha started into production 10,000 units. At the end of the month there were 5,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 40% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP: Direct Material $20,000 Direct Labor 9,000 Factory Overhead 40,000 Alpha uses the weighted-average process costing method. Use this information to determine for the month of March: (Round & enter final answers to the nearest penny.) 1. the cost per equivalent unit of direct material 2. the cost per equivalent unit of conversion 3. the cost per unit transferred to finished goods

Explanation / Answer

Equivalent units Physical units Materials Conversion Units completed and transferred 5000 5000 5000 Ending inventory 5000 5000 2000 Total units 10000 10000 7000 Materials Labor Total costs 20000 49000 Equivalent units 10000 7000 Cost per Equivalent unit 2.00 7.00 1 Cost per equivalent unit of direct material =$2 2 Cost per equivalent unit of conversion = $7 3 Cost per unit transferred to finished goods = $9

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