During December, the production department of a process operations system completed and transferred to finished goods a total of 79,000 units of product. At the end of December, 14,000 additional units were in process in the production department and were 65% complete with respect to materials. The beginning inventory included materials cost of $58,800 and the production department incurred direct materials cost of $186,900 during December. Compute the direct materials cost per equivalent unit for the department using the weighted-average method.

$2.81

Explanation

Completed and transferred (79,000 * 100%)     79,000

Ending Work in Process

Direct materials (14,000*60%)                             8,400

Equivalent units                                                   87,400

Costs of beginning inventory                               $58,800

Costs incurred this period                                    $186,900

Total costs                                                             $245,700

Cost per equivalent unit = Total costs / Equivalent units

Cost per equivalent unit = $245,700 / 87,400

Cost per equivalent unit = 2.811212814645309

Cost per equivalent unit = $2.81

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