Question

Callahan Company uses the? weighted-average method in its process costing system. The Packaging Department started the month with 290 units in? process, started 1,490 ?units, and had 180 units in process at the end of the period. All materials are added at the beginning of the? process, and conversion costs are incurred uniformly. The units in process at the end of the month are 10?% complete with respect to conversion costs. During the month 1,600 units were completed and transferred out. The department incurred the following? costs:Beginning WIPAdded this monthTotalDirect Materials$700$3,400$4,100Conversion Costs3006,1506,450Total$1,000$9,550$10,550The cost per equivalent unit for direct materials is ?(Round your answer to two decimal?places.)A. $2.56B. $7.30C. $5.93D. $2.30

Answer 1

D. $2.30

Step-by-step explanation:

The computation of the cost per equivalent unit for direct material is shown below:

= Total material cost ÷ Equivalent unit of materials

where,

Total material cost is $4,100

And, the equivalent unit of material is

= Units transferred out + ending work in process units

= 1,600 + 180

= 1,780

The units transferred out is

= Beginning units + started units - ending units

= 290 units + 1,490 units - 180 units

= 1,600 units

So, the cost per equivalent for direct material is

= $4,100 ÷ 1,780 units

= $2.30