Question

Timing Technology, Inc. manufactures timing devices. During 20x1, 1,300,000 units were completed and transferred to finished-goods inventory. On December 31, 20x1, there were 310,000 units in work in process. These units were 47 percent complete as to conversion and 100 percent complete as to direct material. Finished-goods inventory consisted of 364,000 units. Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 100 percent of direct-labor costs. There was no finished-goods inventory on January 1, 20x1. A review of the inventory cost records disclosed the following information:

			Costs
	Units		Materials				Labor
Work in process, January 1, 20x1	300,000		$	306,000		$	313,400
(82% complete as to conversion)
Units started in production	1,310,000
Direct-material costs			$	2,270,000
Direct-labor costs						$	2,433,430

Problem 4-25 Part 3

3. Complete the following schedule as of December 31, 20x1, to compute the costs per equivalent unit for material and conversion. (Round "Cost per Equivalent Unit" to 2 decimal places.)

Answer 1

		Units
Reconciliation of Units
A	Opening WIP	300,000
B	Introduced	1,310,000
C=A+B	TOTAL	1,610,000
D	Transferred	1,300,000
E=C-D	Closing WIP	310,000

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,300,000	100%	1,300,000	100%	1,300,000
Closing WIP	310,000	100%	310,000	47%	145,700
Total	1,610,000	Total	1,610,000	Total	1,445,700

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$        306,000.00	$          626,800.00	$            932,800.00
Cost incurred during period	$    2,270,000.00	$      4,866,860.00	$         7,136,860.00
Total Cost to be accounted for (A)	$    2,576,000.00	$      5,493,660.00	$         8,069,660.00
Total Equivalent Units (B)	1,610,000	1,445,700
Cost per Equivalent Units (A/B)	$ 1.60	$ 3.80

Working notes

calculation of Conversion cost
	Beginning WIP	During the period
Direct Labor	$ 313,400.00	$ 2,433,430.00
Add: overheads applied (100% of Direct labor)`	$ 313,400.00	$ 2,433,430.00
Total Conversion cost	$ 626,800.00	$ 4,866,860.00

It is assumed that weighted average method is used in the question.