Question 2. (10 Marks) Equivalent units zero beginning inventory Book Problem 17

Question

Question 2. (10 Marks) Equivalent units zero beginning inventory Book Problem 17-16 Al Zarooni Establishment UAE is a manufacturer of personal computers. The company has two departments assembly and testing. In 2017 the company incurred $800,000 in direct materials and $ 805,000 in conversion costs (direct materials and direct labor) for a total manufacturing cost of $1,805,000. Required: Assume that the work in process, beginning =+ on January 1, 2017. .Assume that during February 5,000 units were placed into production. Further assume the same assembly costs for January and February. In addition 4,000 units were fully completed at the end of February. Work in process of the remaining 1,000 units were 100% completed as to direct materials and only 60% completed as to conversion costs. a) What are the equivalent units as to direct materials and conversion costs and the cost per equivalent unit in February? b) What is the unit cost of the assembled camera in February 2017? Answer

Explanation / Answer

Requirement a:

Calculation of Equivalent Units as to direct material and conversion costs and cost per equivalent unit:

Requirement b:

Calculation of Unit cost of the assembled camera:

Units Direct Material Conversion Costs Total Units started and completed 4000 4000 4000 Ending Work in process 1000 1000 (1000*100%) 600 (1000*60%) Equivalent Units 5000 4600 9600 Total Costs incurred during the year 800000 805000 Cost per Equivalent unit 160 175 335

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