Question

Thomas Manufacturing produces a chemical pesticide and uses process costing. There are three processing

departmentslong dash—​Mixing,

​Refining, and Packaging. On January​ 1, the Refining Department had​ 2,000 gallons of partially processed product in production. During​ January, 36,000 gallons were transferred in from the Mixing​ Department, and​ 31,000 gallons were completed and transferred out. At the end of the​ month, there were​ 7,000 gallons of partially processed product remaining in the Refining Department. See additional details below.

Refining​ Department, beginning balance at January 1
​Quantity:	​2,000	units​ (partially processed)
​Cost:	​$15,600	of costs transferred in
	​$1,600	of materials cost
	​$4,500	of conversion cost
	​$21,700	total account balance

Costs added during January
Cost of units transferred in	​$222,400
Direct materials cost	​$46,000
Conversion cost	​$93,750
Refining​ Department, ending balance at January 31
​Quantity:	​7,000	units​ (partially processed)
Percent complete for materials​ cost:	​85%
Percent complete for conversion​ cost:	​70%

What was the cost per equivalent unit with respect to direct materials costs for the Refining Department in the month of​ January? Use the​ weighted-average method.​ (Round your calculations to the nearest​ cent.)

A.

​$1.29

B.

​$2.74

C.

​$6.80

D.

​$1.25

Answer 1

Answer

• Correct Answer = Option ‘A’ $ 1.29
• Working

EUP - Weighted Average Method	Units	% Material	EUP Materials
Units TRANSFERRED	31,000	100%	31,000
Units of ENDING WIP	7,000	85%	5,950
Equivalent Units of Production			36,950

COST per EUP			Cost of direct Material
Cost of Beginning WIP			$             1,600.00
Cost incurred during the period			$          46,000.00
Total Costs		Costs	$          47,600.00
Equivalent units of production		EUP	36,950
Cost per EUP			$              1.28823 = $ 1.29 = Answer