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, 2/3 completed 12,160 31 Direct materials, 102,600 units 174,420 186,580 31 Direct labor 45,690 232,270 31 Factory overhead 25,696 257,966 31 Goods finished, 104,100 units 249,650 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 $ 1.70 2. Conversion cost per equivalent unit $ 2.40 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	1900
Started and completed in March	98400	98400	98400
Transferred to Packing Department in March	104100	98400	100300
Inventory in process, March 31	4200	4200	1680
Total units to be assigned costs	108300	102600	101980
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		174420	71386
Total equivalent units		102600	101980
Cost per equivalent unit		1.70	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			12160
Costs incurred in March			245806
Total costs accounted for by the Baking Department			257966
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			12160
To complete inventory in process, March 1	0	1330	1330
Cost of completed March 1 work in process			13490
Started and completed in March	167280	68880	236160
Transferred to Packing Department in March			249650
Inventory in process, March 31	7140	1176	8316
Total costs assigned by the Baking Department			257966
1. Direct materials cost per equivalent unit $ 1.70
2. Conversion cost per equivalent unit $ 0.70
3. Cost of the beginning work in process completed during March $13490
4. Cost of units started and completed during March $236160
5. Cost of the ending work in process $ 8316
b
Direct materials in beginning inventory=5700*1.70= $9690
Conversion cost per equivalent unit = (12160-9690)/(5700*2/3)= $0.65
Conversion cost per equivalent unit increase