Question

Equivalent Units of Production

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
March	1	Bal., 6,600 units, 2/5 completed					22,440
	31	Direct materials, 118,800 units	201,960				224,400
	31	Direct labor	53,630				278,030
	31	Factory overhead	30,160				308,190
	31	Goods finished, 120,300 units			298,092		10,098
	31	Bal. ? units, 2/5 completed					10,098

a. Determine the number of units in work in process inventory at March 31.
units

b. Determine the equivalent units of production for direct materials and conversion costs in March. If an amount is zero, enter in "0".

Baking Department
Equivalent Units of Production for Direct Materials and Conversion Costs
For March
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, March 1
Started and completed in March
Transferred to finished goods in March
Inventory in process, March 31
Total

part2:

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., 4,800 units, 2/3 completed					10,240
	31	Direct materials, 86,400 units	146,880				157,120
	31	Direct labor	38,780				195,900
	31	Factory overhead	21,812				217,712
	31	Goods finished, 87,600 units			210,080		7,632
	31	Bal. ? units, 3/5 completed					7,632

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	$

b. 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?

Answer 1

• Exercise 1

Requirement ‘a’
No. of units in WIP at Mar 31 = 5,100 = Answer

Units Reconciliation
Units to account for:
Beginning WIP	6,600
Units started this period	118,800
Total Units to account for	125,400
Total Units accounted for:
Completed & Transferred out	120,300
Ending WIP [6600 + 118800 – 120300]	5,100 = Answer
Total Units accounted for	125,400

Requirement ‘b’

Baking Department
Equivalent Units of Production for Direct Materials and Conversion Costs
For March
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, March 1	6,600	0	3,960 [6600 x 3/5 completed this period]
Started and completed in March	113,700 [120300-6600]	113,700	113,700
Transferred to finished goods in March	120,300	113,700	117,660
Inventory in process, March 31	5,100	5,100 [100% completed]	2,040 [5100 x 2/5 completed]
Total	125,400	118,800	119,700

• Exercise 2

Part ‘a’ [See working below the answers]

1. Direct materials cost per equivalent unit	$ 1.70
2. Conversion cost per equivalent unit	$ 0.70
3. Cost of the beginning work in process completed during March	$ 11,360
4. Cost of units started and completed during March	$ 198,720
5. Cost of the ending work in process	$ 7,632

Workings

Units Reconciliation
Units to account for:
Beginning WIP	4,800
Units started this period	86,400
Total Units to account for	91,200
Total Units accounted for:
Completed & Transferred out	87,600
Ending WIP	3,600
Total Units accounted for	91,200

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	3,600	100%	3,600	60%	2,160
Units STARTED & COMPLETED	82,800	100%	82,800	100%	82,800
Units of beginning WIP	4,800	0.00%	-	33.3%	1,600
Equivalent Units of Production			86,400		86,560
COST per EUP			Material		Conversion
Cost incurred this period			$       146,880.00		$                    60,592.00
Total Costs		Costs	$       146,880.00	Costs	$                    60,592.00
Equivalent units of production		EUP	86,400	EUP	86,560
Cost per EUP			$             1.70000		$                        0.70000

COST ASSIGNMENT & RECONCILIATION
Cost Transferred out:	EUP	Cost per EUP	Total Cost
Cost of Beginning WIP			$          10,240.00
Cost to complete beginning WIP-
- Direct Materials	-	$                   1.70	$                         -
- Conversion	1,600	$                   0.70	$            1,120.00
Total cost to complete beginning WIP			$          11,360.00
Cost of Units started & completed this period:	EUP	Cost per EUP	Total Cost
- Direct Materials	82,800	$                   1.70	$       140,760.00
- Conversion	82,800	$                   0.70	$          57,960.00
Total costs started & Completed this period			$       198,720.00
Total cost of work finished this period				$      210,080.00
Costs of Ending WIP:	EUP	Cost per EUP	Total Cost
- Direct Materials	3,600	$                   1.70	$            6,120.00
- Conversion	2,160	$                   0.70	$            1,512.00
Total cost of ending WIP				$           7,632.00
Total costs accounted for				$      217,712.00

Part ‘b’
Decreased, as Equivalent units have increased.