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., 5,700 units, 2/3 completed					11,590
	31	Direct materials, 102,600 units	164,160				175,750
	31	Direct labor	46,440				222,190
	31	Factory overhead	26,122				248,312
	31	Goods finished, 104,100 units			239,240		9,072
	31	Bal. ? units, 4/5 completed					9,072

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	5700	0	1900
Started and completed in March	98400	98400	98400
Transferred to Finished goods in March	104100	98400	100300
Inventory in process, March 31	4200	4200	3360
Total units to be assigned costs	108300	102600	103660
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		164160	72562
Total equivalent units		102600	103660
Cost per equivalent unit		1.60	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			11590
Costs incurred in March			236722
Total costs accounted for by the Baking Department			248312
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			11590
To complete inventory in process, March 1	0	1330	1330
Cost of completed March 1 work in process			12920
Started and completed in March	157440	68880	226320
Transferred to Finished goods in March			239240
Inventory in process, March 31	6720	2352	9072
Total costs assigned by the Baking Department			248312
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 March $12920
4. Cost of units started and completed during March $226320
5. Cost of the ending work in process $9072
b
Conversion cost per equivalent unit prior period = (11590-5700*1.60)/(5700*2/3)= $0.65
Conversion cost per equivalent unit increase