Question

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., 4,500 units, 4/5 completed					9,540
	31	Direct materials, 81,000 units	129,600				139,140
	31	Direct labor	36,400				175,540
	31	Factory overhead	20,468				196,008
	31	Goods finished, 82,200 units			188,880		7,128
	31	Bal. ? units, 4/5 completed					7,128

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

• All answers are based on following step wise calculation, please go through with following steps:

STEP 1
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	4,500	100%	80%	0%	20%
Units introduced	81,000
Total units to be accounted for	85,500
Completed and Transferred unit	82,200	0%	0%	100%	100%
Ending WIP	3,300	0%	0%	100%	80%

STEP 2
Equivalent Units
	Total Units	Materials		Conversion Cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	4,500	0%	-	20%	900
From units started	77,700	100%	77,700	100%	77,700
Total	82,200		77,700		78,600
	Total Units	Materials		Conversion Cost
Ending WIP	3300	% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	3,300	100%	3,300	80%	2,640
Total EUP	85,500		81,000		81,240

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Materials	Conversion Cost	TOTAL
Cost incurred in Current Period	$                                     129,600.00	$                                 56,868.00	$    186,468.00
Total Equivalent Units	81,000.00	81,240.00
Cost per Equivalent Units	$                                                  1.60	$                                            0.70
Cost of Beginning WIP	$                                        9,540.00	$                                                -	$        9,540.00
Total cost to be accounted for			$    196,008.00

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		82,200.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	Materials	77,700	$              1.60	$ 124,320.00
B	Conversion Costs	78,600	$              0.70	$    55,020.00
C=A+B	Total			$ 179,340.00
D	Cost of Beginning WIP			$       9,540.00
E=C+D	Total Cost of Units transferred				$    188,880.00
	Cost of	Ending WIP		3,300.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Materials	3,300	$              1.60	$       5,280.00
G	Conversion Costs	2,640.00	$              0.70	$       1,848.00
H = F + G	Total Cost of Ending WIP				$        7,128.00
I = E + H	Total Cost accounted for				$    196,008.00

• On the basis of above workings, following answer are provided:

>Direct material cost per Equivalent Unit = $ 1.60 [Step 3]

>Conversion cost per Equivalent Unit = $ 0.70 [Step 3]

>Cost of Beginning WIP completed during March = 900 Equivalent Units for Conversion cost x $ 0.70 = $ 630 [Step 2 and 3]

>Cost of Units started and completed = 77,700 equivalent units x $(1.6 + 0.7) = 77700 x 2.3 = $ 178,710 [Step 2 and 3]

>Cost of Ending WIP = $ 7,128 [Step 4]