Question

Costs per Equivalent Unit

The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.

ACCOUNT Work in Process—Baking Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Mar.	1	Bal., 6,000 units, 2/5 completed					12,600
	31	Direct materials, 108,000 units	194,400				207,000
	31	Direct labor	55,760				262,760
	31	Factory overhead	31,360				294,120
	31	Goods finished, 109,500 units			284,580		9,540
	31	Bal. ? units, 2/5 completed					9,540

a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.

1. Direct materials cost per equivalent unit	$
2. Conversion cost per equivalent unit	$
3. Cost of the beginning work in process completed during March	$
4. Cost of units started and completed during March	$
5. Cost of the ending work in process	$

b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?

Answer 1

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	6000	0	3600
Started and completed in March	103500	103500	103500
Transferred to Finished goods in March	109500	103500	107100
Inventory in process, March 31	4500	4500	1800
Total units to be assigned costs	114000	108000	108900
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		194400	87120
Total equivalent units		108000	108900
Cost per equivalent unit		1.80	0.80
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			12600
Costs incurred in March			281520
Total costs accounted for by the Baking Department			294120
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			12600
To complete inventory in process, March 1	0	2880	2880
Cost of completed March 1 work in process			15480
Started and completed in March	186300	82800	269100
Transferred to Finished goods in March			284580
Inventory in process, March 31	8100	1440	9540
Total costs assigned by the Baking Department			294120
a
1. Direct materials cost per equivalent unit $1.80
2. Conversion cost per equivalent unit $0.80
3. Cost of the beginning work in process completed during March $15480
4. Cost of units started and completed during March $269100
5. Cost of the ending work in process $9540
b
Conversion cost in beginning inventory	1800	=12600-(6000*1.8)
Conversion cost per equivalent unit in beginning inventory	0.75	=1800/(6000*2/5)
Conversion cost per equivalent unit increase