Zeus Corporation produces cultured diamonds via a secretive process that grows the diamonds in a vacuum chamber filled with a carbon gas cloud. The diamonds are produced in a single continuous process, and Zeus uses the weighted-average process costing method of accounting for production. The production process requires constant utilization of facilities and equipment, as well as direct labor by skilled technicians. As a result, direct labor and factory overhead are both deemed to be introduced uniformly throughout production.

Zeus Corporation prepared the following "unit reconciliation" for the month of July:

Unit Reconciliation:

Quantity Schedule

Beginning Work in Process

5,000

Started into Production

6,000

Total Units into Production

11,000

Equivalent Units Calculations:

Conversion

Direct Materials

Direct Labor

Factory Overhead

To Finished Goods

8,000

8,000

8,000

8,000

Ending Work in Process

3,000

1,800

1,500

1,500

Total Units Reconciled

11,000

9,800

9,500

9,500

Ending WIP Completion Status: Materials = 60% and Conversion = 50%

The above beginning work in process inventory had an assigned cost of $3,000,000, divided between direct materials (30%), direct labor (20%), and factory overhead (50%).

Additional costs incurred during July were $9,500,000, divided between direct materials (15%), direct labor (25%), and factory overhead (60%).

Answer Sheet

Cost Per Equivalent Unit:

Conversion

Total Cost

Direct Materials

Direct Labor

Factory Overhead

Beginning Work in Process

Cost incurred during period

Total cost

Equivalent units

Costs per equivalent unit

Prepare a schedule showing the calculation of cost per equivalent unit.