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A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 56,800 units,...

A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 56,800 units, 75% complete with respect to direct labor and overhead. The direct labor beginning inventory costs were $10,600. The department completed and transferred out 110,500 units this period. The ending inventory consists of 46,800 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $41,000 and overhead costs of $49,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:

rev: 10_17_2017_QC_CS-105795

Multiple Choice

  • $0.52.

  • $0.30.

  • $0.42.

  • $0.26.

  • $0.45.

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Answer #1

Answer- The direct labor cost per equivalent unit, using weighted average method is = $0.42.

Explanation- Direct labor cost per equivalent unit = Total direct labor costs/ Total equivalent unit of direct labor

= $51600/122200 units

= $0.42

Total equivalent unit of direct labor = (Unit completed and transferred out * Degree of completion)+( Ending work in process units* Degree of completion)

= (110500 units*110%)+(46800 units*25%)

= 110500 units+11700 units

= 122200 units

Total direct labor costs = Cost of beginning inventory+ Cost incurred during the period

= $10600+$41000

= $51600

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