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., 18,000 units, 1⁄4 completed					14,760
	31	Direct materials, 336,000 units	252,000				266,760
	31	Direct labor	40,000				306,760
	31	Factory overhead	60,530				367,290
	31	Goods finished, 330,000 units			346,410		20,880
	31	Bal. ? units, 2⁄5 completed					20,880

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

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				18,000
Add: Units Started in Process				336,000
Total Units to account for:				354,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				18000
Units started and completed				312,000
Ending Work in Process				24,000
Total Units to be accounted for:				354,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	75%	13,500
Units started and completed			100%	312,000	100%	312,000
Ending Work in Process			100%	24,000	40%	9,600
Total Equivalent units				336,000		335,100
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			252,000		100,530
Equivalent Units			336,000		335,100
Cost per Equivalent unit			0.75		0.3
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (18000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					14760
Material			0	0.75	0
Conversion Cost			13,500	0.3	4050
Cost of units completed from Beg WIP					18810
Units started and Transferred out (312000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			312,000	0.75	234000
Conversion Cost			312,000	0.3	93600
Total Cost of Units completed and transferred out:					327600
Ending Work in process (24,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			24,000	0.75	18000
Conversison Cost			9,600	0.3	2880
Total cost of Ending Work in process:					20,880
Req 1. Direct material cost per uit: 0.75
Req 2.: Conversion cost per unit: 0.30 per unit
Req 3.. Cost of beginning WIP :   $ 18810
Req 4. Cost of Units started and completed: $ 327600
Req 5. Cost of Ending WIP: $ 20880
Req b:
Beginning Cost of WIP			14760
Less: Material cost (18000*0.75)			13500
Conversion cost included			1260
Divide: Conversion EUP			4500
Conversion cost per unit Feb			0.28
Hence, conversion cost has been increased as compared to Feb.