Perrette Motor Company rebuilds automobile engines that have

Perrette Motor Company rebuilds automobile engines that have been damaged or are in need of extensive repair. The rebuilt engine has a 100,000-mile warranty and is purchased by auto shops, large motor pools in companies and governmental units, and some individual auto owners. The plant at Dayton, Ohio, specializes in the Ford V6 engine. Approximately 840 to 1,040 engines are rebuilt each month, and the costs of the plant are assigned to monthly production using weighted-average process costing. The current month began with a work-in-process inventory of 260 engines which were 50% complete for materials and 50% complete for conversion costs. The materials cost in beginning work-in-process was $111,400, while the conversion cost was $112,260. A total of 740 engines were completed and shipped out during the month, and total materials cost of $836,200 and conversion cost of $943,500 were incurred during the month. The ending work-in-process of 360 units was 50% complete for materials and 30% complete for Conversion costs. Required: Compute the cost per equivalent unit for materials and conversion for the month. Cost per Equivalent Unit Materials Conversion

Solution

Equivalent units: Materials 920 =740+(360*50%) Conversion 848 =740+(360*30%) Cost per Equivalent unit: Materials 1030 =(111400+836200)/920 Conversion 1245 =(112260+943500)/848