LDR Manufacturing Produces a Pesticide Chemical and Uses Process Costing

question 73

Multiple Choice

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 liters of partially processed product in production. During January, 32,000 liters were transferred in from the Mixing Department and 29,000 liters were completed and transferred out. At the end of the month, there were 5,000 liters of partially processed product remaining in the Refining Department. See additional details below. Refining Department, beginning balance at January 1, 2012
Costs added during January
Refining Department, ending balance at January 31, 2012
Please perform a process costing analysis and answer the following question:
For the Refining Department in the month of January, what was cost per equivalent unit with respect to direct materials costs? (Please round to nearest cent.)

• A)$1.40
• B)$3.00
• C)$1.34
• D)$7.00

---

Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are a component of the finished product.

Manufacturing Costs

Costs specifically associated with the creation of products, encompassing materials, workforce, and indirect expenses.

Current Year

The present calendar or fiscal year in which business operations, transactions, or financial statements are being considered or reported.

Direct Materials

The raw materials that can be directly attributed to the production of goods.