alleryStart learning →Materials costing $599,427 were added in May for the 44,700 units started that month. What is the materials cost per unit started?
A$13.41 per unit
B$11.84 per unit
C$13.53 per unit
D$20.40 per unit
Answer & Solution
Correct answer: A. $13.41 per unit
1. Materials go in when a batch starts, so materials cost belongs to the units started in the month.
2. The cost pool is $599,427 of direct materials for May.
3. The driver is the 44,700 units started in May, which is also the equivalent units for materials.
4. Materials cost per unit is $599,427 divided by 44,700, which is $13.41 per unit.
5. Dividing by the 50,600 whole units would give about $11.84 per unit and would charge April units for May materials.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 3.3 Process Costing Calculations for a Department in a Manufacturing Company_
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