Question

1.

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., 9,000 units, 4/5 completed					21,600
	31	Direct materials, 162,000 units	291,600				313,200
	31	Direct labor	81,750				394,950
	31	Factory overhead	45,978				440,928
	31	Goods finished, 164,100 units			426,300		14,628
	31	Bal. ? units, 2/5 completed					14,628

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?

2.

Cost of Production Report

The debits to Work in Process—Roasting Department for Morning Brew Coffee Company for August, together with information concerning production, are as follows:

Work in process, August 1, 900 pounds, 50% completed				$5,085*
	*Direct materials (900 X $4.7)	$4,230
	Conversion (900 X 50% X $1.9)	$855
		$5,085
Coffee beans added during August, 28,000 pounds				130,200
Conversion costs during August				55,220
Work in process, August 31, 1,400 pounds, 40% completed				?
Goods finished during August, 27,500 pounds				?

All direct materials are placed in process at the beginning of production.

a. Prepare a cost of production report, presenting the following computations:

1. Direct materials and conversion equivalent units of production for August
2. Direct materials and conversion costs per equivalent unit for August
3. Cost of goods finished during August
4. Cost of work in process at August 31

If an amount is zero, enter in "0". For the cost per equivalent unit, round your answer to two decimal places.

Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1
Received from materials storeroom
Total units accounted for by the Roasting Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials (1)	Conversion (1)
Inventory in process, August 1
Started and completed in August
Transferred to finished goods in August
Inventory in process, August 31
Total units to be assigned costs
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		$	$
Total equivalent units
Cost per equivalent unit (2)		$	$
Costs assigned to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			$
Costs incurred in August
Total costs accounted for by the Roasting Department			$
Costs allocated to completed and partially completed units:
Inventory in process, August 1 balance			$
To complete inventory in process, August 1	$	$
Cost of completed August 1 work in process			$
Started and completed in August
Transferred to finished goods in August (3)			$
Inventory in process, August 31 (4)
Total costs assigned by the Roasting Department			$

b. Compute and evaluate the change in cost per equivalent unit for direct materials and conversion from the previous month (July). If required, round your answers to the nearest cent.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit		$
Change in conversion cost per equivalent unit

Answer 1

1
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	9000	0	1800
Started and completed in March	155100	155100	155100
Transferred to Finished goods in March	164100	155100	156900
Inventory in process, March 31	6900	6900	2760
Total units to be assigned costs	171000	162000	159660
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		291600	127728
Total equivalent units		162000	159660
Cost per equivalent unit		1.80	0.80
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			21600
Costs incurred in March			419328
Total costs accounted for by the Baking Department			440928
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			21600
To complete inventory in process, March 1	0	1440	1440
Cost of completed March 1 work in process			23040
Started and completed in March	279180	124080	403260
Transferred to Finished goods in March			426300
Inventory in process, March 31	12420	2208	14628
Total costs assigned by the Baking Department			440928
1. Direct materials cost per equivalent unit $1.80
2. Conversion cost per equivalent unit $0.80
3. Cost of beginning work in process completed during March $23040
4. Cost of units started and completed during March $403260
5. Cost of the ending work in process $14628
b
Conversion cost per equivalent unit prior period = (21600-9000*1.80)/(9000*4/5)= $0.75
Conversion cost per equivalent unit increase

2
Morning Brew Coffee Company
Cost of Production Report-Roasting Department
For the Month Ended August 31
Unit Information
Units charged to production:
Inventory in process, August 1			900
Received from materials storeroom			28000
Total units accounted for by the Roasting Department			28900
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, August 1	900	0	450
Started and completed in August	26600	26600	26600
Transferred to finished goods in August	27500	26600	27050
Inventory in process, August 31	1400	1400	560
Total units to be assigned costs	28900	28000	27610
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for August in Roasting Department		130200	55220
Total equivalent units		28000	27610
Cost per equivalent unit		4.65	2.00
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, August 1			5085
Costs incurred in August			185420
Total costs accounted for by the Roasting Department			190505
Cost allocated to completed and partially completed units:
Inventory in process, August 1 balance			5085
To complete inventory in process, August 1	0	900	900
Cost of completed August 1 work in process			5985
Started and completed in August	123690	53200	176890
Transferred to finished goods in August			182875
Inventory in process, August 31	6510	1120	7630
Total costs assigned by the Roasting Department			190505
b
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	0.05	=4.70-4.65
Change in conversion cost per equivalent unit	Increase	0.10	=2.00-1.90