O'Leary Company manufactures Product Z in a two-stage production cycle in Departments A and B. Materials are added at the beginning of the process in Department B. O'Leary uses the weighted-average method. Conversion costs for Department B were 40% complete as to the 25,000 units in the beginning work-in-process (WIP) inventory and 50% complete as to the 35,000 units in the ending work-in-process inventory. 50,000 units were completed and transferred out of Department B during October. An analysis of the costs relating to work-in-process inventories and production activity in Department B for October follows:

	Transferred- in Costs			Materials Costs			Conversion Costs
WIP, October 1:	$	50,000		$	15,000		$	5,000
Costs added in October		120,000			27,500			22,000

The total cost per equivalent unit transferred-out for October of Product Z, rounded to the nearest penny, was:

Multiple Choice

• $2.80.

• $2.95.

• $2.85.

• $2.90.

• $2.75.