Question

Costs per Equivalent Unit

The following information concerns production in the Baking Department for December. 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
Dec.	1	Bal., 5,400 units, 4/5 completed					11,988
	31	Direct materials, 97,200 units	165,240				177,228
	31	Direct labor	42,900				220,128
	31	Factory overhead	24,132				244,260
	31	Goods finished, 98,400 units			235,944		8,316
	31	Bal., ? units, 2/5 completed					8,316

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 December	$
4. Cost of units started and completed during December	$
5. Cost of the ending work in process	$

b. Assuming that the direct materials cost is the same for November and December, did the conversion cost per equivalent unit increase, decrease, or remain the same in December?

Answer 1

• Requirement [a] with “5” requirements provided below

1	$                    1.70
2	$                    0.70
3	$          12,744.00
4	$       223,200.00
5	$            8,316.00

• Working

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	4,200	100.0%	4,200	40.0%	1,680
Units STARTED & COMPLETED	93,000	100%	93,000	100%	93,000
Units of beginning WIP	5,400	0.00%	-	20%	1,080
Equivalent Units of Production			97,200		95,760
COST per EUP			Material		Conversion
Cost incurred this period			$       165,240.00		$                    67,032.00
Total Costs		Costs	$       165,240.00	Costs	$                    67,032.00
Equivalent units of production		EUP	97,200	EUP	95,760
Cost per EUP			$                1.7000		$                          0.7000

Cost Transferred out:	EUP	Cost per EUP	Total Cost
Cost of Beginning WIP			11,988.00
Cost to complete beginning WIP-
- Direct Materials	-	1.70	-
- Conversion	1,080.00	0.70	756.00
Total cost to complete beginning WIP			12,744.00

Cost of Units started & completed this period:	EUP	Cost per EUP	Total Cost
- Direct Materials	93,000.00	1.70	158,100.00
- Conversion	93,000.00	0.70	65,100.00
Total costs started & Completed this period			223,200.00

Costs of Ending WIP:	EUP	Cost per EUP	Total Cost
- Direct Materials	4,200	$                              1.70	$            7,140.00
- Conversion	1,680	$                              0.70	$            1,176.00
Total cost of ending WIP				$                 8,316.00