Black Company uses the weighted-average method in its process costing system. The company’s ending work in process inventory consists of 5,000 units, 80% complete with respect to materials and 50% complete with respect to labor and overhead. If the total dollar value of the inventory is $60,000 and the cost per equivalent unit for labor and overhead is $8.00, the cost per equivalent unit for materials must be:
a. $5.00
Selected: b. $10.00 This answer is correct.
c. $8.00
d. $4.00
Correct! Equivalent units for materials is 5,000 times 80 percent equals 4,000. Equivalent units for conversion is 5,000 times 50 percent equals 2,500. Ending inventory dollar value equals $60,000. Ending inventory dollar value is $60,000 equals 4000 times cost per equivalent unit for materials plus $20,000 which is 2,500 units times $8. Cost per equivalent unit must be $10.