During July, the equivalent units of direct materials added to the product worked on by Department A amounted to a total of 90,000 applied as follows: beginning inventory, 20,000 units; units started and completed in July, 60,000 units; and ending inventory, 10,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of the materials cost to be assigned to the ending inventory would be:

Question

Business

Gabby

7 September, 17:35

During July, the equivalent units of direct materials added to the product worked on by Department A amounted to a total of 90,000 applied as follows: beginning inventory, 20,000 units; units started and completed in July, 60,000 units; and ending inventory, 10,000 units. Assuming that the cost of direct materials requisitioned by the department in July was $135,000; the amount of the materials cost to be assigned to the ending inventory would be:

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Malcolm Strong · Answer 1

Cost of ending inventory = $15,000

Explanation:

Given:

Direct material = 90,000

beginning Inventory = 20,000

Completed Inventory = 60,000

Ending Inventory = 10,000

Total cost of direct materials = $135,000

Computation:

Cost of ending inventory = Ending Inventory * Per Item cost

Cost of ending inventory = 10,000 * $1.50

Cost of ending inventory = $15,000

Working Note:

Cost per unit = Cost of direct materials / Units in direct materials

Cost per unit = $135,000 / 90,000

Cost per unit = $1.50