Question

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., 5,100 units, 3/5 completed					11,475
	31	Direct materials, 91,800 units	165,240				176,715
	31	Direct labor	46,850				223,565
	31	Factory overhead	26,350				249,915
	31	Goods finished, 93,000 units			241,647		8,268
	31	Bal. ? units, 2/5 completed					8,268

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

Cost of Production Report-Baking Department
For the Month Ended March 31
Unit Information
Units charged to production:
Inventory in process, March 1			5100
Received from materials storeroom			91800
Total units accounted for by the Baking Department			96900
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	5100	0	2040
Started and completed in March	87900	87900	87900
Transferred to Packing Department in March	93000	87900	89940
Inventory in process, March 31	3900	3900	1560
Total units to be assigned costs	96900	91800	91500
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		165240	73200
Total equivalent units		91800	91500
Cost per equivalent unit		1.8	0.8
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			11475
Costs incurred in March			238440
Total costs accounted for by the Baking Department			249915
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			11475
To complete inventory in process, March 1	0	1632	1632
Cost of completed March 1 work in process			13107
Started and completed in March	158220	70320	228540
Transferred to Finished goods in March			241647
Inventory in process, March 31	7020	1248	8268
Total costs assigned by the Baking Department			249915
a
1. Direct materials cost per equivalent unit $1.8
2. Conversion cost per equivalent unit $0.8
3. Cost of the beginning work in process completed during March $13107
4. Cost of units started and completed during March $228540
5. Cost of the ending work in process $8268
b
Conversion cost in beginning inventory=11475-(5100*1.8)= $2295
Conversion cost per equivalent unit last period=2295/(5100*3/5)= $0.75
Conversion cost per equivalent unit increase in March