The Cost Per Equivalent Unit of Direct Materials and Conversion

question 163

Essay

The cost per equivalent unit of direct materials and conversion in the Bottling Department of Beverages on Jolt Company is $0.47 and $0.15, respectively. The equivalent units to be assigned costs are as follows:? The beginning work in process inventory had a cost of $3,500. Determine the cost of completed and transferred out production and the ending work in process inventory.

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Definitions:

Prime Costs

The direct costs directly attributable to the production of goods, including direct materials and direct labor.

Conversion Costs

The total expenses of direct labor plus manufacturing overheads spent in transforming raw materials into completed goods.

Depreciation Expense

Depreciation expense represents the allocated cost of an asset's reduction in value over time, reflecting the wear and tear or obsolescence of long-term assets used in business operations.

Nonmanufacturing Cost

Expenses not directly related to the production of goods, such as selling, general, and administrative expenses.