The matsui lubricants plant uses the weighted-average method to account for its work-in-process inventories. the accounting records show the following information for a particular day. beginning wip inventory direct materials $ 976 conversion costs 272 current period costs direct materials 11,440 conversion costs 6,644 quantity information is obtained from the manufacturing records and includes the following. beginning inventory 600 units (60% complete as to materials, 53% complete as to conversion) current period units started 4,000 units ending inventory 1,200 units (40% complete as to materials, 20% complete as to conversion)

required:
a. compute the equivalent units for the materials and conversion cost calculations.
b. compute the cost per equivalent unit for direct materials and conversion costs.

a. The equivalent units for the materials and conversion cost is 3,880 units and 3,640 units respectively.

b. The cost per equivalent unit for direct materials and conversion costs is $3.20 and $1.90 respectively.

Explanation:

a. For computing the equivalent units for conversion costs , first we have to compute the transferred units which is shown below:

= Beginning work in process inventory units + additional units - ending work in process inventory units

= 600 units + 4,000 units - 1,200 units

= 3,400 units

Now the equivalent units for material costs equal to

= Transferred units × percentage of completion + ending work in process inventory units × percentage of completion

= 3,400 units × 100% + 1,200 units ×40%

= 3,400 units + 480 units

= 3,880 units

And, the equivalent units for conversion costs equal to

= Transferred units × percentage of completion + ending work in process inventory units × percentage of completion

= 3,400 units × 100% + 1,200 units × 20%

= 3,400 units + 240 units

= 3,640 units

b. The computation of the cost per equivalent unit is shown below:

For direct materials:

= (Beginning WIP inventory  + Current period cost) ÷ (equivalent units for the materials)

= ($976 + $11,440) ÷ (3,880 units)

= $3.20

For conversion cost:

= (Beginning WIP inventory  + Current period cost) ÷ (equivalent units for the conversion cost)

= ($272 + $6,644) ÷ (3,640 units)

= $1.90