Question

The following information concerns production 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 $65,320 of direct materials.

ACCOUNT Work in Process—Forging Department ACCOUNT NO.

Date Item Debit Credit Balance Debit Credit

Nov. 1 Bal., 7,100 units, 50% completed 75,260

30 Direct materials, 65,000 units 578,500 653,760 30

Direct labor 80,720 734,480

30 Factory overhead 111,463 ? 845,943 30

Goods finished, ? units ?

30 Bal., 5,700 units, 60% completed ?

Cost per equivalent units of $8.90 for Direct Materials and $2.90 for Conversion Costs.

Based on the above data, determine each of the following amounts.

If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar.

a. Cost of beginning work in process inventory completed in November. $

b. Cost of units transferred to the next department during November. $

c. Cost of ending work in process inventory on November 30. $

d. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process. If required, round your answers to two decimal places. Direct materials cost per equivalent unit $ Conversion cost per equivalent unit $

e. The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places. Increase or Decrease Amount Change in direct materials cost per equivalent unit $ Change in conversion cost per equivalent unit $

Answer 1

Answer a
Cost of beginning work in process inventory completed in November =
Physical Units in Beginning Inventory	7100
x % completed during Nov.for conversion cost	50%
Equivalent units	3550
x Cost per equivalent unit for conversion cost	$2.90
Conversion cost incurred during Nov.on beginning inventory	$10,295.00
Add : Cost of Beginning Inventory	$75,260.00
Cost of beginning work in process inventory completed in November =	$85,555.00
Answer b
Cost of units transferred to the next department during November
Cost of beginning work in process inventory completed in November	$85,555.00
Add : Cost of units added and completed in Nov.
- Material cost (59300 units * $8.90)	$527,770.00
- Conversion cost (59300 units * $2.90)	$171,970.00
Cost of units transferred to the next department during November	$785,295.00
Calculation of units added and completed during Nov.
	Physical Units
Beginning Inventory	7100
Add : Units added during Nov.	65000
Less : Ending Inventory	5700
Completed units	66400
Less : Units completed out of beginning Inventory	7100
Units added and completed during Nov.	59300
Answer c
Cost of ending work in process inventory on November 30
	Material	Conversion
Physical Units in ending Inventory	5700	5700
x % Completed	100%	60%
Equivalent Units	5700	3420
x Cost per equivalent unit	$8.90	$2.90
Total Cost	$50,730.00	$9,918.00
Cost of ending work in process inventory on November 30	$60,648.00
Answer d
Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process
	Material	Conversion
Cost of beginning Inventory	$65,320.00	$9,940.00
/ Equivalent Units	7100	3550
Cost per equivalent Unit (in Nov.1 beginning WIP)	$9.20	$2.80
Answer e
The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month.
	Oct	Nov	Change
Cost per equivalent unit for direct material	$9.20	$8.90	$0.30	Decrease
Cost per equivalent unit for conversion	$2.80	$2.90	$0.10	Increase