Question

equirement 1. What is the cost per equivalent unit for conversion costs for KLN bottles in March

20172017​?

Use a formula to solve for the cost per equivalent unit for conversion costs. ​(Round the cost per equivalent unit amount to the nearest cent. Conv.​ = conversion.)

Total conv. costs incurred	÷	Total equivalent units, conv. costs	=	Cost per equivalent unit, conv. costs
70840	÷		=

Requirement 2. Compute the cost per equivalent unit with respect to each of the three​ materials: cullets,​ silicone, and polypropylene.

Begin by using a formula to solve for the cost per equivalent unit with respect to cullets. ​(Round the cost per equivalent unit amount to the nearest cent. Conv.​ = conversion, Equiv.​ = equivalent.)

(	Cullets purchased	-	Ending inventory, cullets	) ÷	Equiv. units, cullets	=	Cost per equiv. unit, cullets
(	54300	-	5000	) ÷		=

Use a formula to solve for the cost per equivalent unit with respect to silicone. ​(Round the cost per equivalent unit amount to the nearest cent. Conv.​ = conversion, Equiv.​ = equivalent.)

(	Silicone purchased	-	Ending inventory, silicone	) ÷	Equiv. units, cullets	=	Cost per equiv. unit, silicone
(	22200	-	4000	) ÷		=

Use a formula to solve for the cost per equivalent unit with respect to polypropylene. ​(Round the cost per equivalent unit amount to the nearest cent. Conv.​ = conversion.)

Polypropylene used	÷	Equivalent units, polypropylene	=	Cost per equivalent unit, polypropylene
	÷		=

Requirement 3. What is the cost of goods completed and transferred​ out?

	Cost of goods
	completed and
	transferred
Direct materials
Conversion costs
Total

Requirement 4. What is the cost of goods formed but not​ assembled?

	Cost of goods
	formed but
	not assembled
Direct materials
Conversion costs
Total

Requirement 5.  What is the cost of goods assembled but not​ finished?

	Cost of goods
	assembled but
	not finished
Direct materials
Conversion costs
Total

Cullets purchased $54,300

Silicone purchased $22,200

Polypropylene used $10,400

Total conversion costs incurred $70,840

Ending inventory, cullets  $5,000

Ending inventory, silicone $4,000

Number of bottles completed and transferred  13,000

Inventory in process at the end of the month:  

Units formed but not assembled  3,000

Units assembled but not finished  1,000

Consulting studies have indicated that of the total conversion costs required to complete a finished​ unit, the forming operation requires 50%​,

the assembly 40%​,

and the finishing 10%

Answer 1

1. Conversion costs incurred in March = $70,840

Equivalent units of work:

Units completed and transferred: 13,000 X 100% = 13,000

Units formed but not assembled: 3,000 X 50% = 1,500

Units assembled but not finished: 1,000 X 90% = 900

Total equivalent units: 15,400

Conversion cost per equivalent unit = $70,840/ 15,400 = $4.60

2. Cost per equivalent unit calculation for the 3 materials used:

Cullets: = ($54,300-$5,000)/(13000+3000+1000) = $49,300/17000 => $2.90

Silicone: = ($22,200-$4,000)/(13000+1000) = $18,200/14000 => $1.30

Polypropylene: = $10,400/13000 = $0.80

3. Cost of 13,000 bottles completed and transferred:

Materials: 13,000 X ($2.90 + $1.30 + $0.80) = $ 65,000

Conversion costs: 13,000 X $4.60 = $ 59,800

Total Cost = $124,800

4. Cost of 3,000 units formed but not assembled (first stage):

Materials (only cullets): 3,000 X $2.90 = $8,700

Conversion costs: 3,000 X 50% X $4.60 = $6,900

Total Cost = $15,600

5. Cost of 1,000 units assembled but not finished (second stage):

Materials (cullets and silicone): 1,000 X ($2.90 + $1.30) = $4,200

Conversion costs: 1,000 X 90% X $4.60 = $ 4,140

Total Cost = $8,340