Question

Baden Company has gathered the following information.

Units in beginning work in process		0
Units started into production		37,000
Units in ending work in process		7,200
Percent complete in ending work in process:
Conversion costs		40	%
Materials		100	%
Costs incurred:
Direct materials		$ 83,250
Direct labor		$ 65,200
Overhead		$ 109,638

(a)

Compute equivalent units of production for materials and for conversion costs.

		Materials		Conversion Costs
The equivalent units of production

(b)  

Determine the unit costs of production.

(c)  

Show the assignment of costs to units transferred out and in process.

Answer 1

Solution:-

(a) Compute equivalent units of production for materials and for conversion costs:-

		Materials		Conversion Costs
The equivalent units of production		37,000 units		32,680 units

Explanation:-

EUP(Materials) = (Units in beginning work in process + Units started in production - Units in ending work in process ) + (Units in ending work in process x Percentage of Completion)

EUP(Materials) = (0 + 37,000 units - 7,200 units ) + (7,200 units x 100%)

EUP(Materials) = 37,000 units

EUP(Conversion) = (Units in beginning work in process + Units started in production - Units in ending work in process ) + (Units in ending work in process x Percentage of Completion)

EUP(Conversion) = (0 + 37,000 units - 7,200 units ) + (7,200 units x 40%)

EUP(Conversion) = 32,680 units

(b) Determine the unit costs of production:-

Material	$2.25
Conversion cost	$5.35

Explanation:-

Unit costs of direct materials = Direct materials / EUP(Materials)

Unit costs of direct materials = $83,250 / 37,000 units

Unit costs of direct materials = $2.25

Unit costs of conversion costs = (Direct Labor + Conversion Costs) / EUP(Conversion)

Unit costs of conversion costs = ($65,200 + $109,638) / 32,680 units

Unit costs of conversion costs = $5.35

(c)  Show the assignment of costs to units transferred out and in process.:-

Units transferred out (29,800 X 7.50) = 223,500

Units ending work in process (7,200 X 2.25 = 16,200) + (2,880 X 5.35 = 15,408) = 31,608