A Company Uses a Process Cost Accounting System (A) Calculate the Equivalent Units of Production for Direct Labor

question 6

Essay

A company uses a process cost accounting system.The following information is available regarding direct labor for the current year:
$$\begin{array} {l l } \text { Goods in process, January } 1 & 5,500 \text { units, } 80 \% \\&\text { complete } \\\text { Goods in process, December } 31 & 8,800 \text { units, } 40 \% \\&\text { complete } \\\text { Units completed and transferred to } & \\\text { Finished goods } & 46,900 \text { units } \\\text { Direct labor costs during the year } & \$ 266,300\end{array}$$
(a) Calculate the equivalent units of production for direct labor for the year using weighted average.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).

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Definitions:

Purchase Costs

The actual amount paid or the expense incurred in acquiring goods or services, including the product price, shipping, and handling fees.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Physical Inventory

The process of counting the actual inventory on hand at the end of an accounting period, usually for verification purposes.

Inventory System

A system for tracking inventory levels, orders, sales, and deliveries, which can be manual or technologically driven, helping businesses manage their stock efficiently.