Asked by keith sanders on May 30, 2024
Verified
The cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $27,225. The conversion cost for the period in the Bottling Department is $7,596. The total equivalent units for direct materials and conversion are 60,500 liters and 63,300 liters, respectively. Determine the direct materials and conversion cost per equivalent unit. Round answers to nearest cent.
Conversion Cost
The combined total of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.
Direct Materials
Direct materials constitute the primary raw inputs directly incorporated into the manufacture of products, distinctly traceable to the product being produced.
- Utilize the ideas of equivalent units of production for cost calculation in a process costing setting.
- Explain the method of calculating the cost of goods transferred out and the final inventory in a process costing system.
Verified Answer
AI
Ashley IknerJun 05, 2024
Final Answer :
Cost per Equivalent Unit of Materials = $27,225 ÷ 60,500 liters = $0.45
Cost per Equivalent Unit of Conversion = $7,596 ÷ 63,300 liters = $0.12
Cost per Equivalent Unit of Conversion = $7,596 ÷ 63,300 liters = $0.12
Learning Objectives
- Utilize the ideas of equivalent units of production for cost calculation in a process costing setting.
- Explain the method of calculating the cost of goods transferred out and the final inventory in a process costing system.
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