Question

Baden Company has gathered the following information.

Units in beginning work in process		0
Units started into production		40,100
Units in ending work in process		8,000
Percent complete in ending work in process:
Conversion costs		40	%
Materials		100	%
Costs incurred:
Direct materials		$80,200
Direct labor		$61,900
Overhead		$109,305

Part 1

Compute equivalent units of production for materials and for conversion costs.

		Materials		Conversion Costs
The equivalent units of production

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Part 2

Determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 2.25.)

		Materials		Conversion Costs
Unit costs		$		$

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Part 3

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

Units transferred out		$
Units in ending work in process		$

Answer 1

(a) Equivalent units of production for:

Materials: 40,100

Conversion costs: 35,300

	Physical Units
Units in Beginning work in process	0
Units started in Production	40,100
Total Units to account for	40,100

		Equivalent Units
	Physical Units	Direct Materials	Conversion Costs
Units completed and transferred out	32,100	32,100	32,100
Units in ending work in process	8,000	8,000	3,200
Total Units accounted for	40,100	40,100	35,300

(b) Unit costs of production

	Direct Materials	Conversion Costs (Labor + OH)	Total
Beginning work in process	0	0	0
Costs added during the month	80,200	171,205	251,405
Total costs to be accounted for	80,200	171,205	251,405

	Direct Materials	Conversion Costs	Total
Total costs to be accounted for	80,200	171,205	251,405
Total equivalent units accounted for	40,100	35,300
Unit Costs of production	2.00	4.85	6.85
	(80,200 / 40,100)	(171,205 / 35,300)

(c) Assignment of cost to units transferred out and in process

	Total
Costs assigned to units transferred out	219,885
(32,100 x $6.85)
Costs assigned to ending work in process	31,520
(8,000 x $2) + (3,200 x $4.85)
Total costs accounted for	251,405

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