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., 5,700 units, 2/3 completed					9,500
	31	Direct materials, 102,600 units	133,380				142,880
	31	Direct labor	39,480				182,360
	31	Factory overhead	22,212				204,572
	31	Goods finished, 104,100 units			197,600		6,972
	31	Bal. ? units, 3/5 completed					6,972

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	5700	0	1900
Started and completed in March	98400	98400	98400
Transferred to Finished goods in March	104100	98400	100300
Inventory in process, March 31	4200	4200	2520
Total units to be assigned costs	108300	102600	102820
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		133380	61692
Total equivalent units		102600	102820
Cost per equivalent unit		1.30	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			9500
Costs incurred in March			195072
Total costs accounted for by the Baking Department			204572
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			9500
To complete inventory in process, March 1	0	1140	1140
Cost of completed March 1 work in process			10640
Started and completed in March	127920	59040	186960
Transferred to Finished goods in March			197600
Inventory in process, March 31	5460	1512	6972
Total costs assigned by the Baking Department			204572
1. Direct materials cost per equivalent unit $1.30
2. Conversion cost per equivalent unit $0.60
3. Cost of beginning work in process completed during March $10640
4. Cost of units started and completed during March $186960
5. Cost of the ending work in process $6972
b
Conversion cost per equivalent unit prior period = (9500-5700*1.30)/(5700*2/3)= $0.55
Conversion cost per equivalent unit increase