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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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For September, Murphy Company has manufacturing costs in BWIP equal to $100,000. During September, the manufacturing costs incurred were $550,000. Using the weighted average method, Murphy had 100,000 equivalent units for September. The equivalent unit cost for September is

  1. a. $1.00.
  2. b. $7.50.
  3. c. $6.50.
  4. d. $6.00.
  5. e. $6.62.

To determine

Identify equivalent unit cost of Company M.

Explanation

Equivalent Units of Production:

The total units of finished goods along with those goods that are not fully complete are known as equivalent units of production. In other words, equivalent units of production measures both completed and nearly completed units.

c.

Use the following formula to calculate equivalent unit cost:

Equivalent unit cost=Cost in BWIP+Cost incurred during month Equivalent units=$100,000+$550,000100,000 units=$6

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