STEP $3$: Determine the cost per equivalent unit. In order to determine the total cost to produce a unit, a manufacturer must compute the materials cost and the conversion cost $($labor and overhead$)$ in a completed unit. This amount is the cost per equivalent unit. The formula for this calculation is:

Cost per Equivalent Unit $=\frac{\text{C}\text{o}\text{s}\text{t}\text{s}\text{I}\text{n}\text{c}\text{u}\text{r}\text{r}\text{e}\text{d}\text{D}\text{u}\text{r}\text{i}\text{n}\text{g}\text{t}\text{h}\text{e}\text{M}\text{o}\text{n}\text{t}\text{h}}{\text{E}\text{q}\text{u}\text{i}\text{v}\text{a}\text{l}\text{e}\text{n}\text{t}\text{U}\text{n}\text{i}\text{t}\text{s}\text{P}\text{r}\text{o}\text{d}\text{u}\text{c}\text{e}\text{d}\text{D}\text{u}\text{r}\text{i}\text{n}\text{g}\text{t}\text{h}\text{e}\text{M}\text{o}\text{n}\text{t}\text{h}}$

The cost per equivalent unit must be calculated separately for materials and conversion costs since these resources are added at different rates in the manufacturing process $($materials are added all at the beginning and conversion costs evenly throughout the process$).$ The Transfer In cost per equivalent unit must also be calculated.

Materials Equivalent Unit Cost is calculated as follows:

$$25\mathrm{.}64=$$$14100$

EUP from above $($step $2)$

Conversion Equivalent Unit Cost is calculated as follows:

$$10.=$$$52,716$

EUP for above $($step $2)$

Transfer In Equivalent Unit Cost is calculated as follows:

$$42\mathrm{.}33=\frac{\text{\$}}{\text{E}\text{U}\text{P}(EUP\text{f}\text{o}\text{r}\text{T}\text{r}\text{a}\text{n}\text{s}\text{f}\text{e}\text{r}Inis100\%of\text{n}\text{u}\text{m}\text{b}\text{e}\text{r}\text{t}\text{r}\text{a}\text{n}\text{s}\text{f}\text{e}\text{r}\text{r}\text{e}\text{d}in)}$

STEP $4$: Allocate costs to transferred and partially completed units. After calculating the cost per equivalent unit for materials and conversion costs, the cost of units completed and those still in process must be determined. Similar to Step $1-$ UNITS. now with COSTS, look at a format that helps keep tract of the $$$: Cost TO Account For and Costs Accounted For.

Transferred In Direct Materials Conversion Cost Total Cost

Costs TO Account For

Beginning work in process

Costs added during THIS period

Total Costs To Account For $27,280$

Costs added during THIS period $$23,280$

Divided by EUP this period$($units$)550$

Cost per equivalent unit

$

$

$14,100$

$

$

$100,796$

$52,716$

$550$

$578$

$$91\mathrm{.}2042$