Direct material cost for equivalent unit is 110 and there ar

Direct material cost for equivalent unit is $1.10 and there are 2000 physical units 100% complete with respect to materials. What are the total costs of these 2000 physical units that are 50% complete with respect to conversion and conversion costs are $3.75 per equivalent unit?

a. $4950

b. $5950

c. $6950

d. None of the above

Solution

Solution.

Total Costs of 2,000 Phycial Units = E(quivalent Units for Material x Equivalent Unit Cost for Material) + (Equivalent Units for Conversion x Equivalent Unit Cost for Conversion)

Equivalent Units = Physical Units x Percentage of Completion

Here,

Equivalent Units for Direct Material = Physical Units x 100%Complete = 2,000 Units x 100% = 2,000 Units

Equivlanet units for Conversion = Physical Units x 50% Completion = 2,000 Units x 50% = 1,000 Units

Total Costs of 2,000 Phycial Units = (Equivalent Units for Material x Equivalent Unit Cost for Material) + (Equivalent Units for Conversion x Equivalent Unit Cost for Conversion)

= (2,000 Units x $1.10) + (1,000 Units x $3.75)

= $2,200 + $3,750

= $5,950

Hence, the correct option is b. $5,950

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