Hanover Glassware produces crystal serve ware and uses process costing. At the start of May, 2,300 units were in process. During May, 11,000 units were completed and 2,000 units were in process at the end of May. The units in process at the end of May were 80% complete with respect to material and 30% complete with respect to conversion costs. Other information is as follows: Work in process, May 1: Direct material $28,800 Conversion costs 48,000 Costs incurred during May: Direct material $198,000 Conversion costs 242,000 How much is the cost per equivalent unit for direct materials during May?

$18.00

Explanation:

First calculate the equivalent units of production with respect for direct materials.

Ending Work In Process (2,000 × 80%)                                            =  1,600

Completed and transferred out (11,000 × 100%)                              = 11,000

Equivalent units of production with respect to direct materials     = 12,600

Then, calculate the cost per equivalent unit for direct materials

Cost per equivalent unit = Total Cost ÷ Total Equivalent Units

                                        = ($28,800 + $198,000) ÷ 12,600

                                        = $18.00

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