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Costs per Equivalent Unit The following information concerns production in the Baking Department for March. All...

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., 8,700 units, 4/5 completed 18,444
31 Direct materials, 156,600 units 250,560 269,004
31 Direct labor 70,340 339,344
31 Factory overhead 39,574 378,918
31 Goods finished, 158,700 units 364,662 14,256
31 Bal. ? units, 4/5 completed 14,256

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?

Solutions

Expert Solution

Work in process at Mar 1 8700
(+) Units started in March 156600
(-) Transferred to finished goods in December 158700
Unit of work in process inventory at December 31 6600
Units trasnferred to finished goods 158700
(-) Work in process units ar December 1 8700
Units started and completed during December 150000
a.
As the materials are added at the beginning of the process, they 100% completed when they are introduced in the process .
Materials Conversion
Units started and completed during December 150000 150000
(+) Beginning work in process equivalent units [ Beginning work in process units * ( 1 - Fraction completed ) ] 0 1740
(+) Ending work in process equivalent units [ Ending work in process units * Fraction completed ] 6600 5280
Equivalent units of production 156600 157020
Cost added during the period 250560 109914
(/) Equivalent units 156600 157020
Cost per equivalent units 1.60 0.70
1. Direct materials cost per equivalent unit 1.60
2. Conversion cost per equivalent unit 0.70
3. Cost of beginning work in process completed during December [ (0*1.60) + (1740*0.70) ] 1218
4. Cost of units started and completed during December [ (150000*1.60) + (150000*0.70) ] 345000
5. Cost of ending work in process [ (6600*1.60) + (5280*0.70) ] 14256
b.
Assuming that the direct materials cost is the same for November and December, did the conversion cost per equivalent unit increase, decrease, or remain the same in December?
Answer : Increase

ekkarill92 answered 3 years ago
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