Question

Franck Ribéry is the owner of a high end day spa in New York City called Ribéry in Reverie. At the start of the last year the business has recently started selling personally endorsed intensified shin repair kits ISRK's. Based on the following information how many equivalent ISRK's were produced?

Beginning inventory = 6,400 units @ 41% complete at cost of $228,288

Ending Inventory = 8,600 units @ 22% complete

During the quarter 21,604 units were expensed to COGS

Materials Cost = $639,528

Conversion Costs = $1,729,318

What is the materials cost per unit for the ISRK's?

A. $21.97

B. $22.59

C. $23.45

D. $24.48

Answer 1

Calculation of Conversion Cost Per Unit: Equivalent Units from Beginning Inventory (6400 x 41%) Add: Units trasferred to COGS Sub Total Add: Equivalent Units in Ending Inventory (8600 x 22%) Total Equivalent Units Completed 2624 21604 24228 1892 26120 Total Materials Costs 639,528.00 Materials Cost Per Unit ($639,528/26120 Units) 24.48 Per Unit Option D is Correct.