The cost of direct materials transferred into the Bottling Department of the Mountain Springs Water Company is $918,400. The conversion cost for the period in the Bottling Department is $516,000. The total equivalent units for direct materials and conversion are 28,700 and 8,600 liters, respectively. Determine the direct materials and conversion cost per equivalent unit.

Equivalent Unit of Materials=$32

Equivalent Unit of Conversion Costs=$60

Explanation:

Calculation to Determine the direct materials and conversion cost per equivalent unit

Calculation for DIRECT MATERIALS

Using this formula for direct materials

Equivalent Unit of Materials=Cost of direct materials transferred/Total equivalent units for direct materials

Let plug in the formula

Equivalent Unit of Materials=$918,400/28,700 liters

Equivalent Unit of Materials=$32

Calculation for CONVERSION COST PER EQUIVALENT UNIT

Using this formula

Equivalent Unit of Conversion Costs=Conversion cost/Total equivalent units for Conversion

Let plug in the formula

Equivalent Unit of Conversion Costs=$516,000/8,600 liters

Equivalent Unit of Conversion Costs=$60

Therefore the direct materials and conversion cost per equivalent unit will be :

Equivalent Unit of Materials=$32

Equivalent Unit of Conversion Costs=$60

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