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4 December, 11:37

Barnett Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 12,000 units were completed and transferred to the next department. An analysis of the costs relating to work in process at May 1 and to production activity for May follows: The total cost per equivalent unit for May was: Select one: a. $5.02 b. $5.10 c. $5.12 d. $5.25

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  1. 4 December, 12:49
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    Missing information:

    Materials Conversion

    Work in process, May 1 $13,800 $3,740

    Costs added during May $42,000 $26,260

    Answer:

    b. $5.10

    Explanation:

    materials added at the beginning of the process

    Beginning WIP 4,000 units

    100% complete materials 75% complete conversion costs

    Ending WIP 6,000 units

    100% complete materials 50% complete conversion costs

    12,000 were completed and transferred out

    total equivalent units:

    materials = 6,000 + 12,000 = 18,000 conversion costs = (6,000 x 50%) + 12,000 = 15,000

    total materials = $13,800 + $42,000 = $55,800

    equivalent cost per unit = $55,800 / 18,000 = $3.10

    total conversion costs = $3,740 + $26,260 = $30,000

    equivalent cost per unit = $30,000 / 15,000 = $2

    total equivalent cost per unit = $3.10 + $2 = $5.10
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