Question

The cost of direct materials transferred into the Bottling Department of Rocky Springs Beverage Company is $248,400. The conversion cost for the period in the Bottling Department is $205,540. The total equivalent units for direct materials and conversion are 46,000 ounces and 47,800 ounces, respectively.

Determine the direct materials and conversion costs per equivalent unit. If required, round to the nearest cent.

Direct materials cost per equivalent unit:	$ per ounce
Conversion costs per equivalent unit:	$ per ounce

Answer 1

Solution:

Given data:

• Cost of direct materials = $ 2,48,400
• Cost of conversion = $ 2,05,540
• Total equivalent units for direct materials = 46,000 ounces
• Total equivalent units for conversion = 47,800 ounces

i)

Calculation of Direct material cost per equivalent unit :

Particulars	Amount	Amount
Direct material cost per equivalent unit	= Cost of direct materials / Total equivalent units for direct materials = $ 2,48,400 /  46,000 = $ 5.40 per ounce	$ 5.4 per ounce

ii)

Calculation of conversion costs per equivalent unit :

Particulars	Amount	Amount
conversion cost per equivalent unit	= Cost of conversion / Total equivalent units for conversion = $ 2,05,540 / 47,800 = $ 4.30 per ounce	$ 4.30 per ounce