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In: Accounting

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., 7,800 units, 2/3 completed 17,940
31 Direct materials, 140,400 units 252,720 270,660
31 Direct labor 71,370 342,030
31 Factory overhead 40,150 382,180
31 Goods finished, 142,200 units 369,460 12,720
31 Bal. ? units, 2/5 completed 12,720

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 $

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

Units at the beginning

7800

Units introduced/started

140400

Total

148200

Units completed

142200

Units at the end

6000

(148200-142200)

Particulars

Direct Material

Direct Labor

Factory Overhead

%

Units

%

Units

%

Units

At the beginning

0%

0

(7800*0%)

1/3

2600

(7800*1/3)

1/3

2600

(7800*1/3)

Started and completed during the period

100%

142200

(142200*100%)

100%

142200

100%

142200

At the end

100%

6000

2/5

2400

(6000*2/5)

2/5

2400

(6000*2/5)

Equivalent units

148200

147200

147200

1. Direct material cost per equivalent unit

=Total material cost/ equivalent units

=252720/148200

=1.71

2. Conversion cost per equivalent unit

Conversion cost = Direct labor + Factory Overhead

                                = 71370+40150

                                                = 111520

                Equivalent units = 147200

                Conversion cost per equivalent unit = 111520/147200 = 0.76

3. Cost of beginning work in process completed during the year

=prior period cost + current period cost

= 17940 + (2600 * 0.7576)

= 17940 + 1970

= 19910

4. Cost of units started and completed during the year

=142200 * (1.71+0.76)

= 142200*2.47

= 351235

5. Cost of ending work in progress

= 2400 * 2.47

= 5928

ekkarill92 answered 1 year ago
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