Cost per Equivalent Unit: Average Cost Method The following information concerns

Question

Cost per Equivalent Unit: Average Cost Method The following information concerns production in the Forging Department for June. The Forging Department uses the average cost method ACCOUNT Work in Process-Forging Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit 5,000 54,200 79,400 104,520 June 1 Bal., 500 units, 40% completed 30 Direct materials, 3,700 units 30 Direct labor 30 Factory overhead 30 Goods transferred, 3,600 units 30 Bal., 600 units, 70% completed 49,200 25,200 25,120 a. Determine the cost per equivalent unit. x per equivalent unit b. Determine cost of units transferred to Finished Goods c. Determine the cost of units in ending Work in Process.

Explanation / Answer

a Equivalent units = 3600+(600*70%)= 4020 Cost per equivalent unit=104520/4020= $26 b Cost of units transferred = 3600*26= $93600 c Cost of ending work in process=(600*70%*26)= $10920

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