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., 4,500 units, 3/5 completed					11,295
	31	Direct materials, 81,000 units	162,000				173,295
	31	Direct labor	46,930				220,225
	31	Factory overhead	26,402				246,627
	31	Goods finished, 82,200 units			238,245		8,382
	31	Bal. ? units, 3/5 completed					8,382

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	4500	0	1800
Started and completed in March	77700	77700	77700
Transferred to Finished goods in March	82200	77700	79500
Inventory in process, March 31	3300	3300	1980
Total units to be assigned costs	85500	81000	81480
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		162000	73332
Total equivalent units		81000	81480
Cost per equivalent unit		2.00	0.90
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			11295
Costs incurred in March			235332
Total costs accounted for by the Baking Department			246627
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			11295
To complete inventory in process, March 1	0	1620	1620
Cost of completed March 1 work in process			12915
Started and completed in March	155400	69930	225330
Transferred to Finished goods in March			238245
Inventory in process, March 31	6600	1782	8382
Total costs assigned by the Baking Department			246627
1. Direct materials cost per equivalent unit $2.00
2. Conversion cost per equivalent unit $0.90
3. Cost of beginning work in process completed during March $12915
4. Cost of units started and completed during March $225330
5. Cost of the ending work in process $8382
b
Conversion cost per equivalent unit prior period = (11295-4500*2.00)/(4500*3/5)= $0.85
Conversion cost per equivalent unit increase