Question

1 Equivalent Units of Production

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
March	1	Bal., 7,500 units, 4/5 completed					27,000
	31	Direct materials, 135,000 units	243,000				270,000
	31	Direct labor	69,300				339,300
	31	Factory overhead	38,988				378,288
	31	Goods finished, 136,800 units			364,380		13,908
	31	Bal. ? units, 4/5 completed					13,908

a. Determine the number of units in work in process inventory at March 31.
units

b. Determine the equivalent units of production for direct materials and conversion costs in March. If an amount is zero, enter in "0".

Baking Department
Equivalent Units of Production for Direct Materials and Conversion Costs
For March
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, March 1
Started and completed in March
Transferred to finished goods in March
Inventory in process, March 31
Total

2

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., 4,200 units, 2/3 completed					7,420
	31	Direct materials, 75,600 units	105,840				113,260
	31	Direct labor	29,310				142,570
	31	Factory overhead	16,494				159,064
	31	Goods finished, 76,500 units			152,860		6,204
	31	Bal. ? units, 4/5 completed					6,204

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

1.
a. Units in Work in Process at March 31 = 7500 + 135000 - 136800 = 5700 units

b.

	Physical units	Materials	Conversion
Work in Process Beginning	7500	0	1500
Units started and completed	129300	129300	129300
Units transferred to next department	136800	129300	130800
Ending Work in Process :	5700	5700	4560
Total Units Accounted for	142500
Equivalent units		135000	135360

2.
1. & 2.

	Physical units	Materials	Conversion
Work in Process Beginning	4200
Started during the period	75600
Total Units to account for	79800
Work in Process Beginning	4200	0	1400
Units started and completed	72300	72300	72300
Units transferred to next department	76500	72300	73700
Ending Work in Process :	3300	3300	2640
Total Units Accounted for	79800
Equivalent units		75600	76340
	Materials	Conversion	Total
Cost added during the period	$          105,840	$               45,804	$         151,644
Equivalent units of Production	75600	76340
Cost per equivalent unit	$                1.40	$                   0.60	$                2.00

3.

	Materials	Conversion	Total
Cost of work on Beginning Work in Process	$                     -	$                    840	$                 840

4.

	Materials	Conversion	Total
Units started and completed	72300	72300
Cost per equivalent unit	$                1.40	$                   0.60
Cost of units started and completed	$          101,220	$              43,380	$         144,600

5.

	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	3300	2640
Cost per equivalent unit	$                1.40	$                   0.60
Cost of Ending work in Process Inventory	$              4,620	$                 1,584	$              6,204

b. Conversion Cost for February = $7420 - 4200 x 1.40 = $1540
Conversion Cost per unit = $1540 / 1400 = $1.10 per unit

Conversion cost per unit decreased in March