Question

Exercise 3-9 (Video) Baden Company has gathered the following information. Units in beginning work in process 0 Units started into production 43,600 Units in ending work in process 7,000 Percent complete in ending work in process: Conversion costs 40 % Materials 100 % Costs incurred: Direct materials $82,840 Direct labor $70,400 Overhead $106,900 Compute equivalent units of production for materials and for conversion costs. Materials Conversion Costs The equivalent units of production LINK TO TEXT LINK TO TEXT Determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 2.25.) Materials Conversion Costs Unit costs $ $ LINK TO TEXT LINK TO TEXT Show the assignment of costs to units transferred out and in process. Units transferred out $ Units in ending work in process $ Click if you would like to Show Work for this question:

Answer 1

Ans:

Compute equivalent units of production for materials and for conversion costs

Equivalent units of Materials: (Units in Beginning Work in process + Units started into production - Units in ending work in process) + Units in ending work in process

= ($0 + 43,600 - 7,000) + 7,000

= 43,600

Equivalent units of conversion costs : (Units in Beginning Work in process + Units started into production - Units in ending work in process) + (Units in ending work in process * 40%)

= ($0 + 43,600 - 7,000) + (7,000 * 40%)

= 36,600

Determine the unit costs of production

Unit costs of materials = Direct materials / Equivalent units of Materials

= $82,840 / 43,600

= $1.9

Unit costs of conversion costs = (Direct labor + Overhead) / Equivalent units of conversion costs

= ($70,400 + $106,900) / 36,600

= $177,300/ 36,600

= 4.84

Show the assignment of costs to units transferred out and in process

Units transferred out = 36,600 * 6.74 = $246,684
(36,600=43600-7000)

Units ending work in process = Materials + Conversion costs

where, Materials = 7,000 * $1.9 = $13,300
Note:7000=7000*100%

Conversion costs = 2800 * $4.84 = $13,552
2800=7000*40%

Units ending work in process = $13,300+ $13,552 = $26,852