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., 7,800 units, 2/5 completed					17,160
	31	Direct materials, 140,400 units	266,760				283,920
	31	Direct labor	72,440				356,360
	31	Factory overhead	40,744				397,104
	31	Goods finished, 142,200 units			383,784		13,320
	31	Bal. ? units, 2/5 completed					13,320

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

Cost of Production Report-Baking Department
For the Month Ended March 31
Unit Information
Units charged to production:
Inventory in process, March 1			7800
Received from materials storeroom			140400
Total units accounted for by the Baking Department			148200
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	7800	0	4680
Started and completed in March	134400	134400	134400
Transferred to Packing Department in March	142200	134400	139080
Inventory in process, March 31	6000	6000	2400
Total units to be assigned costs	148200	140400	141480
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		266760	113184
Total equivalent units		140400	141480
Cost per equivalent unit		1.9	0.8
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			17160
Costs incurred in March			379944
Total costs accounted for by the Baking Department			397104
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			17160
To complete inventory in process, March 1	0	3744	3744
Cost of completed March 1 work in process			20904
Started and completed in March	255360	107520	362880
Transferred to Finished goods in March			383784
Inventory in process, March 31	11400	1920	13320
Total costs assigned by the Baking Department			397104
a
1. Direct materials cost per equivalent unit $1.9
2. Conversion cost per equivalent unit $0.8
3. Cost of the beginning work in process completed during March $20904
4. Cost of units started and completed during March $362880
5. Cost of the ending work in process $13320
b
Conversion cost in beginning work in process = 17160-(7800*1.9)= 2340
Conversion cost per equivalent unit last month = 2340/(7800/5*2)= $0.75
The conversion cost per equivalent unit increase