Question

A department adds all materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 40600 units were completed and transferred out; and there were 20000 units in the ending work in process that were 30% complete. During July, $96960 materials costs and $97860 conversion costs were charged to the department.
The unit production costs for materials and conversion costs for July was _______.

Answer 1

Answer:

The unit costs for materials is $1.62 per unit

The unit costs of conversion costs  is $2.13 per unit

Explanation:

In determining the the unit production costs for materials and conversion costs, it is very important to calculate equivalent number of units applicable to materials as well as the one applicable to conversion costs

Equivalent units for materials

Completed units        40000 @100% complete    40000

Ending inventory        20000@ 100% complete   20000

                                                                                 60000

Equivalent units for conversion costs

Completed units 40000@100%                  40000

Ending inventory 20000 @ 30% complete  6000

                                                                         46000

unit production costs of materials=$96960/60000=$1.62 per unit

unit production costs of conversion costs=$97860/46000=$2.13 per unit