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., 5,700 units, 4/5 completed					12,654
	31	Direct materials, 102,600 units	174,420				187,074
	31	Direct labor	45,350				232,424
	31	Factory overhead	25,504				257,928
	31	Goods finished, 104,100 units			249,612		8,316
	31	Bal. ? units, 2/5 completed					8,316

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

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	5700	0	1140
Started and completed in March	98400	98400	98400
Transferred to Packing Department in March	104100	98400	99540
Inventory in process, March 31	4200	4200	1680
Total units to be assigned costs	108300	102600	101220
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		174420	70854
Total equivalent units		102600	101220
Cost per equivalent unit		1.7	0.7
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			12654
Costs incurred in March			245274
Total costs accounted for by the Baking Department			257928
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			12654
To complete inventory in process, March 1	0	798	798
Cost of completed March 1 work in process			13452
Started and completed in March	167280	68880	236160
Transferred to Packing Department in March			249612
Inventory in process, March 31	7140	1176	8316
Total costs assigned by the Baking Department			257928
a
1. Direct materials cost per equivalent unit. = $1.7
2. Conversion cost per equivalent unit = $0.7
3. Cost of the beginning work in process completed during March = $13452
4. Cost of units started and completed during March. = $236160
5. Cost of the ending work in process = $8316
b
Increase by $0.05