Question

Equivalent Units of Production and Related Costs

The charges to Work in Process—Baking Department for a period as well as information concerning production are as follows. The Baking Department uses the average cost method, and all direct materials are placed in process during production.

Work in Process—Baking Department
Bal., 2,700 units, 70% completed	7,803	To Finished Goods, 19,400 units	?
Direct materials, 19,700 units	83,134
Direct labor	39,127
Factory overhead	20,156
Bal., 3,000 units, 30% completed	?

If required, round cost per equivalent unit answer to two decimal places.

a. Determine the number of whole units to be accounted for and to be assigned costs.
units

b. Determine the number of equivalent units of production.
units

c. Determine the cost per equivalent unit.
$ per equivalent unit

d. Determine the cost of the units transferred to Finished Goods.
$

e. Determine the cost of units in ending Work in Process.
$

Answer 1

Part - a:

Computation the number of units to be accounted is:

Number of units to be accounted = Number of units at the beginning + Number of units completed and started + Number of total units at the end

= 2,700 units + 16,700 units + 3,000 units

= 22,400 units

Hence, the number of units to be accounted is 22,400 units.

Working note:

Computation the number of units completed and started is:

Number of units completed and started = Number of units for direct material - Number of total units at the end

= 19,700 units - 3,000 units

= 16,700 units

Hence, the number of units completed and started is 16,700 units.

Part - b:

Computation the number of equivalent units is:

Number of equivalent units = Number of units at the beginning + Number of units completed and started + Number of completed units at the end

= 2,700 units + 16,700 units + 900 units

= 20,300 units

Hence, the number of equivalent units is 20,300 units.

Working note:

1.

Computation the number of units completed and started is:

Number of units completed and started = Number of units for direct material - Number of total units at the end

= 19,700 units - 3,000 units

= 16,700 units

Hence, the number of units completed and started is 16,700 units.

2.

Computation the number of completed units at the end is:

Number of completed units at the end = Number of total units at the end * Percentage of completion

= 3,000 units * 0.30

= 900 units

Hence, the number of completed units at the end is 900 units.

Part - c:

Computation the cost of each equivalent unit is:

Cost of each equivalent unit = Total cost / Number of equivalent units

= $150,220 / 20,300 units

= $7.40

Hence, the cost of each equivalent unit is $7.40

Working note:

Computation the total cost is:

Total cost = Amount of work in process at the beginning + Amount of material + Amount of labor + Amount of factory overhead

= $7,803 + $83,134 + $39,127 + $20,156

= $150,220

Hence, the total cost is $150,220.

Part - d:

Computation cost of transferred units is:

Cost of transferred units = Number of finished goods unit * Cost per equivalent unit

= 19,400 units * $7.40

= $143,560

Hence, the cost of transferred units is $143,560.

Part - e:

Computation the cost of units in work in process at the end is:

Cost of units in work in process at the end = Number of completed units at the end * Cost per equivalent unit

= 900 units * $7.40

= $6,660

Hence, the cost of units in work in process at the end is $6,660.

Working note:

Computation the number of completed units at the end is:

Number of completed units at the end = Number of total units at the end * Percentage of completion

= 3,000 units * 0.30

= 900 units

Hence, the number of completed units at the end is 900 units.