Question

#5 - 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

Solution:

Part a -- 1 & 2

1. Direct materials cost per equivalent unit.	$1.90
2. Conversion cost per equivalent unit.	$0.80

Working

		Equivalent Units
	Physical Units	Materials	Conversion
Beginning Work in Process (2/5 Completed during the current period for Conversion)	7200	0	2880
Started and Completed Units (100% completed )	124200	124200	124200
Goods Finished	131400
Ending Work In Process (100% completed for Material and 3/5 Completed for Conversion)	5400	5400	3240
Total		129600	130320
	Material	Conversion
Cost incurred during the period
Direct materials	$246,240
Direct labor		$66,720
Factory Overhead		$37,536
Total Cost	$246,240	$104,256
Equivalent Units	129600	130320
Cost per Equivalent Unit	$1.90	$0.80

Part a-3 -- Cost of the beginning work in process completed during March = $19,224

Cost of beginning work in process completed during March	Materials	Conversion	Total
Equivalent Units (A)	0	2880
Cost per Equivalent Unit (B)	$1.90	$0.80
Total Cost incurred during March	$0.00	$2,304.00	$2,304
Plus: Cost of Beginning WIP			$16,920
Total Cost of beginning work in process completed during March			$19,224

Part a-4 -- Cost of units started and completed during March.= $335,340

Cost of Units Started and Completed during March	Materials	Conversion	Total
Equivalent Units (A)	124200	124200
Cost per Equivalent Unit (B)	$1.90	$0.80
Total Cost	$235,980	$99,360	$335,340

Part a-5 -- Cost of the ending work in process = $12,852

Cost of Ending Work In Process	Materials	Conversion	Total
Equivalent Units (A)	5400	3240
Cost per Equivalent Unit (B)	$1.90	$0.80
Total Cost of Ending Work in Process	$10,260	$2,592	$12,852

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