Question

Assume that direct material costs in beginning Work-in-Process Inventory is $500 and an additional $1,500 worth of materials is added during the month. Equivalent units for direct materials is 500 units. What is the cost per equivalent unit for direct materials?

Answer 1

$4.00

Step-by-step explanation:

Data provided:

Direct material costs in beginning Work-in-Process Inventory = $500

worth of materials is added during the month = $1,500

Equivalent units for direct materials = 500 units

Now,

the total cost incurred

= Direct material costs in beginning Work-in-Process Inventory + worth of materials is added during the month

= $500 + $1,500

= $2,000

Now,

The Cost per equivalent unit for direct materials

=
`\frac{\textup{Total cost incurred}}{\textup{Equivalent units for direct materials}}`

The Cost per equivalent unit for direct materials =
`(2000)/(500)`

or

The Cost per equivalent unit for direct materials = $4.00