Asked by Antouny Ebeid on May 28, 2024
Verified
The cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $28,072. The conversion cost for the period in the Bottling Department is $10,275. The total equivalent units for direct materials and conversion are 63,800 and 68,500, respectively. Determine the direct materials and conversion cost per equivalent unit. Round answers to nearest cent.
Conversion Cost
The combined total of labor and manufacturing overhead costs necessary to convert raw materials into finished products.
Direct Materials
Raw materials that can be directly traced to the manufacturing of a product in terms of cost and physical presence.
- Execute the concepts of equivalent units of production to evaluate costs in an environment of process costing.
- Illustrate the procedure for determining the cost of goods transferred out and the residual inventory in a process cost framework.
Verified Answer
NB
Nafisha BarkerJun 02, 2024
Final Answer :
Cost per Equivalent Unit of Materials = $28,072 ÷ 63,800 liters = $0.44
Cost per Equivalent Unit of Conversion = $10,275 ÷ 68,500 liters = $0.15
Cost per Equivalent Unit of Conversion = $10,275 ÷ 68,500 liters = $0.15
Learning Objectives
- Execute the concepts of equivalent units of production to evaluate costs in an environment of process costing.
- Illustrate the procedure for determining the cost of goods transferred out and the residual inventory in a process cost framework.
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