Question

In: Accounting

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

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, 2/3 completed 13,800
31 Direct materials, 108,000 units 194,400 208,200
31 Direct labor 55,860 264,060
31 Factory overhead 31,420 295,480
31 Goods finished, 109,500 units 284,500 10,980
31 Bal. ? units, 4/5 completed 10,980

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?
Increase

Solutions

Expert Solution

Equivalent Units
Whole Units Direct Materials Conversion
Inventory in process, March 1 6000 0 2000
Started and completed in March 103500 103500 103500
Transferred to Finished goods in March 109500 103500 105500
Inventory in process, March 31 4500 4500 3600
Total units to be assigned costs 114000 108000 109100
Cost Information
Costs per equivalent unit:
Direct Materials Conversion
Total costs for March in Baking Department 194400 87280
Total equivalent units 108000 109100
Cost per equivalent unit 1.80 0.80
Costs charged to production:
Direct Materials Conversion Total
Inventory in process, March 1 13800
Costs incurred in March 281680
Total costs accounted for by the Baking Department 295480
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance 13800
To complete inventory in process, March 1 0 1600 1600
Cost of completed March 1 work in process 15400
Started and completed in March 186300 82800 269100
Transferred to Finished goods in March 284500
Inventory in process, March 31 8100 2880 10980
Total costs assigned by the Baking Department 295480
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 = $15400
4. Cost of units started and completed during March = $269100
5. Cost of the ending work in process = $10980
b
Conversion cost in beginning inventory = 13800-(6000*1.80)= $3000
Conversion cost per equivalent unit in beginning inventory = 3000/(6000*2/3)= $0.75
Conversion cost per equivalent unit increase

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