Prepare a schedule showing the calculation of cost per equivalent unit. Zeus Cor

ID: 2464513 • Letter: P

Question

Prepare a schedule showing the calculation of cost per equivalent unit.

Zeus Corporation produces cultured diamonds via a secretive process that grows the diamonds in a vacuum chamber filled with a carbon gas cloud. The diamonds are produced in a single continuous process, and Zeus uses the weighted-average process costing method of accounting for production.

The production process requires constant utilization of facilities and equipment, as well as direct labor by skilled technicians. As a result, direct labor and factory overhead are both deemed to be introduced uniformly throughout production. Zeus Corporation prepared the following "unit reconciliation" for the month of July: Unit Reconciliation: Quantity
Schedule Beginning Work in Process 5,000 Started into Production 6,000 Total Units into Production 11,000 Equivalent Units Calculations: Conversion Direct
Materials Direct
Labor Factory Overhead To Finished Goods 8,000 8,000 8,000 8,000 Ending Work in Process 3,000 1,800 1,500 1,500 Total Units Reconciled 11,000 9,800 9,500 9,500 Ending WIP Completion Status:
Materials = 60% and Conversion = 50% The above beginning work in process inventory had an assigned cost of $3,000,000, divided between direct materials (30%), direct labor (20%), and factory overhead (50%). Additional costs incurred during July were $9,500,000, divided between direct materials (15%), direct labor (25%), and factory overhead (60%).

Prepare a schedule showing the calculation of cost per equivalent unit.

Cost Per Equivalent Unit: Conversion Total
Cost Direct
Materials Direct
Labor Factory
Overhead Beginning Work in Process Cost incurred during period Total cost Equivalent units Costs per equivalent unit

Explanation / Answer

Answer

Schedule showing the calculation of cost per equivalent unit

Figures in $

Particulars

Total Cost

Direct materials

Direct Labour

Factory Overhead

Beginning work in process

3000000

900000

600000

1500000

3000000*0.3

3000000*0.2

3000000*0.5

Cost incurred during period

9500000

1425000

2375000

5700000

9500000*0.15

9500000*0.25

9500000*0.6

Total Cost (a+b)

12500000

2325000

2975000

7200000

Equivalent Units

9800

9500

Cost per equivalent unit (c/d)

237.24

313.16

757.89