Question

1. 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., 6,600 units, 2/5 completed					15,444
   	31	Direct materials, 118,800 units	237,600				253,044
   	31	Direct labor	68,950				321,994
   	31	Factory overhead	38,780				360,774
   	31	Goods finished, 120,300 units			348,738		12,036
   	31	Bal. ? units, 2/5 completed					12,036

   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	6600	0	3960
Started and completed in March	113700	113700	113700
Transferred to Finished goods in March	120300	113700	117660
Inventory in process, March 31	5100	5100	2040
Total units to be assigned costs	125400	118800	119700
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		237600	107730
Total equivalent units		118800	119700
Cost per equivalent unit		2.00	0.90
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			15444
Costs incurred in March			345330
Total costs accounted for by the Baking Department			360774
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			15444
To complete inventory in process, March 1	0	3564	3564
Cost of completed March 1 work in process			19008
Started and completed in March	227400	102330	329730
Transferred to Finished goods in March			348738
Inventory in process, March 31	10200	1836	12036
Total costs assigned by the Baking Department			360774
1. Direct materials cost per equivalent unit $2.00
2. Conversion cost per equivalent unit $0.90
3. Cost of beginning work in process completed during March $19008
4. Cost of units started and completed during March $329730
5. Cost of the ending work in process $12036
b
Conversion cost per equivalent unit prior period = (15444-6600*2.00)/(6600*2/5)= $0.85
Conversion cost per equivalent unit increase