Question

Cost per Equivalent Unit

The following information concerns products in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $109,600 of direct materials.

ACCOUNT Work in Process—Forging Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Nov.	1	Bal., 8,000 units, 80% completed					132,640
	30	Direct materials, 73,000 units	978,200				1,110,840
	30	Direct labor	111,950				1,222,790
	30	Factory overhead	154,598		?		1,377,388
	30	Goods finished, ? units					?
	30	Bal., 6,400 units, 60% completed					?

a. Determine the number of units transferred to the next department.
fill in the blank 1 units

b. Determine the costs per equivalent unit of direct materials and conversion. If required, round your answer to two decimal places.

Cost per equivalent unit of direct materials	$
Cost per equivalent unit of conversion	$

c. Determine the cost of units started and completed in November.
$

Answer 1

Solution

Units transferred = 74,600

Cost per equivalent unit of direct materials	$ 13.40
Cost per equivalent unit of conversion	$ 3.70

.

Cost of units started and completed in November= $1,138,860

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed	% completed this period
	Material	Conversion	Material	Conversion
Beginning WIP	8,000	100%	80%	0%	20%
Units introduced	73,000
Total units to be accounted for	81,000
Completed and Transferred unit	74,600	0%	0%	100%	100%
Ending WIP	6,400	0%	0%	100%	60%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material	Conversion
Units Transferred:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	8,000	0%	-	20%	1,600
From units started/Introduced	66,600	100%	66,600	100%	66,600
Total	74,600		66,600		68,200
	Total Units	Material	Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	6,400	100%	6,400	60%	3,840
Total EUP	81,000		73,000		72,040

..

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material	Conversion	TOTAL
Cost incurred in Current Period	$ 978,200	$ 266,548	$ 1,244,748
Total Equivalent Units	73,000	72,040
Cost per Equivalent Units	$ 13.40	$ 3.70	$ 17.10
Cost of Beginning WIP			$ 132,640
Total cost to be accounted for	$ 1,377,388

..

From units started & completed
Material	66,600	$ 13.40	$ 892,440
Conversion	66,600	$ 3.70	$ 246,420	$ 1,138,860