Production Cost Analysis Using Equivalent Units

What is the value of materials transferred​ out?

If an equivalent unit costs $10.00 for direct​ materials, what is the value of materials transferred​ out?

Answer:

The value of materials transferred out is $350,000.

Production cost analysis using equivalent units is a method used to determine the value of materials transferred out during the production process.

In this case, the total units completed and transferred out are 35,000 and there are 12,400 units remaining in ending WIP at 85% completion.

To calculate the value of materials transferred out, we need to multiply the completed and transferred units by the equivalent cost for direct material per unit, which is $10.00.

Therefore, the value of materials transferred out can be calculated as follows:

Value of materials transferred out = Completed and transferred units x Equivalent cost for direct material per unit

Value of materials transferred out = 35,000 units x $10.00

Value of materials transferred out = $350,000

By multiplying the completed and transferred units with the equivalent cost for direct material per unit, we can determine the value of materials transferred out in the production process.