Question

(#5)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., 7,200 units, 3/5 completed					16,920
	31	Direct materials, 129,600 units	246,240				263,160
	31	Direct labor	66,720				329,880
	31	Factory overhead	37,536				367,416
	31	Goods finished, 131,400 units			354,564		12,852
	31	Bal. ? units, 3/5 completed					12,852

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			7200
Received from materials storeroom			129600
Total units accounted for by the Baking Department			136800
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	7200	0	2880
Started and completed in March	124200	124200	124200
Transferred to Packing Department in March	131400	124200	127080
Inventory in process, March 31	5400	5400	3240
Total units to be assigned costs	136800	129600	130320
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		246240	104256
Total equivalent units		129600	130320
Cost per equivalent unit		1.9	0.8
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			16920
Costs incurred in March			350496
Total costs accounted for by the Baking Department			367416
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			16920
To complete inventory in process, March 1	0	2304	2304
Cost of completed March 1 work in process			19224
Started and completed in March	235980	99360	335340
Transferred to Finishing in March			354564
Inventory in process, March 31	10260	2592	12852
Total costs assigned by the Baking Department			367416
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 $19224
4. Cost of units started and completed during March $335340
5. Cost of the ending work in process $12852
b
Conversion cost in beginning inventory = 16920-(7200*1.9)= $3240
Conversion cost per equivalent unit last month = 3240/(7200*3/5)= $0.75
Conversion cost per equivalent unit increase in March