Question

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., 4,800 units, 2/3 completed					9,280
	31	Direct materials, 86,400 units	129,600				138,880
	31	Direct labor	39,100				177,980
	31	Factory overhead	21,996				199,976
	31	Goods finished, 87,600 units			192,560		7,416
	31	Bal. ? units, 4/5 completed					7,416

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 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	4800	0	1600
Started and completed in March	82800	82800	82800
Transferred to Finished goods in March	87600	82800	84400
Inventory in process, March 31	3600	3600	2880
Total units to be assigned costs	91200	86400	87280
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		129600	61096
Total equivalent units		86400	87280
Cost per equivalent unit		1.50	0.70
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			9280
Costs incurred in March			190696
Total costs accounted for by the Baking Department			199976
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			9280
To complete inventory in process, March 1	0	1120	1120
Cost of completed March 1 work in process			10400
Started and completed in March	124200	57960	182160
Transferred to Finished goods in March			192560
Inventory in process, March 31	5400	2016	7416
Total costs assigned by the Baking Department			199976
1. Direct materials cost per equivalent unit $1.50
2. Conversion cost per equivalent unit $0.70
3. Cost of beginning work in process completed during March $10400
4. Cost of units started and completed during March $182160
5. Cost of the ending work in process $7416
b
Conversion cost per equivalent unit prior period = (9280-4800*1.50)/(4800*2/3)= $0.65
Conversion cost per equivalent unit increase