Question

Equivalent Units of Production

Units of production data for the two departments of Pacific Cable and Wire Company for November of the current fiscal year are as follows:

	Drawing Department	Winding Department
Work in process, November 1	7,400 units, 45% completed	3,700 units, 65% completed
Completed and transferred to next processing department during November	101,400 units	100,100 units
Work in process, November 30	5,600 units, 75% completed	5,000 units, 30% completed

a. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for November for the Drawing Department. If an amount is zero, enter in "0".

Drawing Department
Direct Materials and Conversion Equivalent Units of Production
For November
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, November 1
Started and completed in November
Transferred to Winding Department in November
Inventory in process, November 30
Total

b. If all direct materials are placed in process at the beginning of production, determine the direct materials and conversion equivalent units of production for November for the Winding Department. If an amount is zero, enter in "0".

Winding Department
Direct Materials and Conversion Equivalent Units of Production
For November
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, November 1
Started and completed in November
Transferred to finished goods in November
Inventory in process, November 30
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., 7,500 units, 4/5 completed 13,050 31 Direct materials, 135,000 units 175,500 188,550 31 Direct labor 51,540 240,090 31 Factory overhead 28,992 269,082 31 Goods finished, 136,800 units 259,620 9,462 31 Bal. ? units, 3/5 completed 9,462 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. $

Answer 1

(1a) Drawing Dept:-

	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, November 1	7400	Nil*	(7400 * 55%) =4070
Started and completed in November	94000	94000	94000
Transferred to Winding Department in November	101400	94000	98070
Inventory in process, November 30	5600	5600	(5600 * 75%) =4200
Total	107000	99600	102270

*In Beginning WIP, Direct Material is Nil. Because all direct materials are placed in process at the beginning of production. Hence for Beginning WIP all Direct Material are placed in previous period.

(1b) Winding Dept :-

	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, November 1	3700	Nil	(3700 * 35%) =1295
Started and completed in November	96400	96400	96400
Transferred to Winding Department in November	100100	96400	97695
Inventory in process, November 30	5000	5000	(5000 * 30%) =1500
Total	105100	101400	99195

(2)

1. Direct materials cost per equivalent unit.	$1.30
2. Conversion cost per equivalent unit.	$0.6
3. Cost of the beginning work in process completed during March.	$13950
4. Cost of units started and completed during March.	$245670
5. Cost of the ending work in process.	$9462

Explanations :-

Equivalent Units :-

	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, March 1	7500	Nil	(7500 * 1/5) =1500
Started and completed in March	129300	129300	129300
Transferred to Next Dept	136800	129300	130800
Inventory in process, March 31	5700	5700	(5700 *3/5) =3420
Total	142500	135000	134220

(i) Direct materials cost per equivalent unit:-

All Direct Material is added in the beginning of the process. Hence for units started (135000 units) during this period all the direct material is added.

DM cost pu = $175500/135000 units = $1.30

(ii) Conversion cost per equivalent unit:-

Total conversion cost = Direct Labour + Factory O/H

   = 51540 + 28992 = $80532

Conversion cost pu = $80532/134220 units = $0.6

(iii) Cost of the beginning work in process completed during March:-

Cost of Beginning WIP incurred in previous period + Cost incurred on Beginning WIP during this period

Cost incurred during previous period = $13050

Cost incurred during previous period = Equivalent units of Beginning WIP * unit cost

     = 1500 * 0.60 = $900

Total cost of Beginning WIP = 13050 + 900 = $13950

(iv) Cost of units started and completed during March:-

Units started & Completed = 129300

Material cost = 129300 * $1.30 = $168090

Conversion cost = 129300 * $0.6 = $77580

Total = 168090 + 77580 = $245670

(v) Cost of the ending work in process:-

Material = 5700 units * $1.30 = $7410

Conversion = 3420 units * $0.6 = $2052

Total = 7410 + 2052 = $9462