At Hodgson Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: Beginning WIP direct materials $ 38 comma 000 Beginning WIP conversion costs $20,250 Costs of materials added $ 393 comma 100 Costs of conversion added $271,125 WIP beginning (50% for conversion) 20 comma 200 units Units started 120 comma 500 units Units completed and transferred out 106 comma 700 units WIP ending (60% for conversion) 34 comma 000 units What is the cost per equivalent unit for direct materials? (Round your final answer to the nearest cent.)

$2.79 per unit

Explanation:

Given that :

Beginning WIP direct materials                   $ 38, 000

Beginning WIP conversion costs                 $20,250

Costs of materials added                              $ 393, 100

Costs of conversion added                           $271,125

WIP beginning (50% for conversion)            20,200 units

Units started                                                   120,500 units

Units completed and transferred out           106,700 units

WIP ending (60% for conversion)                  34,000 units

We are to find the cost per equivalent unit for direct materials? (Round your final answer to the nearest cent.)

Let first calculate the  total equivalent units for direct materials which is:

= Units completed and transferred out   + WIP ending

= (106,700 + 34000) units

= 140700 units

The cost per equivalent unit for direct materials = Costs of materials added (a)/ equivalent number of unit (b)

The cost per equivalent unit for direct materials = $ 393, 100/140700 unit

The cost per equivalent unit for direct materials = $2.79 per unit

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