Question

The following information concerns production in the Baking Department for May. 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
May.	1	Bal., 5,400 units, 3/5 completed					10,746
	31	Direct materials, 97,200 units	155,520				166,266
	31	Direct labor	44,140				210,406
	31	Factory overhead	24,824				235,230
	31	Goods finished, 98,400 units			226,158		9,072
	31	Bal. ? units, 4/5 completed					9,072

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 May.	$
4. Cost of units started and completed during May.	$
5. Cost of the ending work in process.	$

b. Assuming that the direct materials cost is the same for April and May, did the conversion cost per equivalent unit increase, decrease, or remain the same in May?
SelectDecreaseIncreaseRemain the sameItem 6

Answer 1

Cost of Production Report-Baking Department
For the Month Ended May 31
Unit Information
Units charged to production:
Inventory in process, May 1			5400
Received from materials storeroom			97200
Total units accounted for by the Baking Department			102600
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, May 1	5400	0	2160
Started and completed in May	93000	93000	93000
Transferred to Packing Department in May	98400	93000	95160
Inventory in process, May 31	4200	4200	3360
Total units to be assigned costs	102600	97200	98520
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for May in Baking Department		155520	68964
Total equivalent units		97200	98520
Cost per equivalent unit		1.6	0.7
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, May 1			10746
Costs incurred in May			224484
Total costs accounted for by the Baking Department			235230
Cost allocated to completed and partially completed units:
Inventory in process, May 1 balance			10746
To complete inventory in process, May 1	0	1512	1512
Cost of completed May 1 work in process			12258
Started and completed in May	148800	65100	213900
Transferred to finsihed goods in May			226158
Inventory in process, May 31	6720	2352	9072
Total costs assigned by the Baking Department			235230
1. Direct materials cost per equivalent unit = 1.6
2. Conversion cost per equivalent unit= 0.7
3. Cost of the beginning work in process completed during May = 1512
4. Cost of units started and completed during May = 213900
5. Cost of the ending work in process = 9072
b
Conversion cost in May 1 inventory=10746-(5400*1.6)= 2106
Per unit conversion cost = 2106-(5400/5*3) = $0.65
Conversion cost per equivalent unit increase by $0.05(0.7-0.65)