Banana Ltd. manufactures juice with two different ingredients: 100% of ingredient A is added at the beginning of the production process; 100% of Ingredient B is added when the juice is 60% complete. Conversion costs are added uniformly throughout the entire production process.

Quality testing is conducted at the 60% conversion point, prior to adding ingredient B. Rejected units at quality testing are accounted for as spoilage, and spoilage is included in equivalent units of output. Production data for June Year 8, are as follows:

WIP inventory, June1 (40% converted)

50,250 units

Started in production

75,000 units

Spoiled

200 units

Completed production

85,000 units

WIP inventory, June31 (80% converted)

35,000 units

For June, direct material costs incurred and in beginning WIP inventory totalled $220,000 for ingredient A and $350,000 for ingredient B. Using the weighted average method, what is the cost per equivalent unit (EU) for ingredient A and ingredient B?

Answer rating: 100% (QA)

Banana Ltd Cost per Equivalent Unit Weighted Average Method We can calculate the cost per equivalent ... View the full answer