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., 8,100 units, 2/5 completed					17,010
	31	Direct materials, 145,800 units	262,440				279,450
	31	Direct labor	75,200				354,650
	31	Factory overhead	42,304				396,954
	31	Goods finished, 147,600 units			383,598		13,356
	31	Bal. ? units, 2/5 completed					13,356

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

Units charged to production:
Inventory in process, March 1			8100
Received from materials storeroom			145800
Total units accounted for by the Baking Department			153900
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	8100	0	4860
Started and completed in March	139500	139500	139500
Transferred to Packing Department in March	147600	139500	144360
Inventory in process, March 31	6300	6300	2520
Total units to be assigned costs	153900	145800	146880
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		262440	117504
Total equivalent units		145800	146880
Cost per equivalent unit		1.8	0.8
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			17010
Costs incurred in March			379944
Total costs accounted for by the Baking Department			396954
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			17010
To complete inventory in process, March 1	0	3888	3888
Cost of completed March 1 work in process			20898
Started and completed in March	251100	111600	362700
Transferred to Packing Department in March			383598
Inventory in process, March 31	11340	2016	13356
Total costs assigned by the Baking Department			396954
a
1. Direct materials cost per equivalent unit $1.8
2. Conversion cost per equivalent unit $0.8
3. Cost of the beginning work in process completed during March $20898
4. Cost of units started and completed during March $362700
5. Cost of the ending work in process $13356
b
Conversion cost in beginning inventory = 17010-(8100*1.8)= $2430
Conversion cost per unit in beginning inventory =2430/(8100*2/5)=$0.75
Conversion cost per equivalent unit increase in March