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., 6,900 units, 3/5 completed					15,525
   	31	Direct materials, 124,200 units	223,560				239,085
   	31	Direct labor	63,960				303,045
   	31	Factory overhead	35,976				339,021
   	31	Goods finished, 126,000 units			327,393		11,628
   	31	Bal. ? units, 3/5 completed					11,628

   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?
   Increase

   Feedback

   a. & b. Where in the process are direct materials added to the units? Remember that there are two pieces to this manufacturing process, direct materials costs and conversion costs. Recall the definition of work in process.

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Answer 1

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	6900	0	2760
Started and completed in March	119100	119100	119100
Transferred to Finished goods in March	126000	119100	121860
Inventory in process, March 31	5100	5100	3060
Total units to be assigned costs	131100	124200	124920
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		223560	99936
Total equivalent units		124200	124920
Cost per equivalent unit		1.80	0.80
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			15525
Costs incurred in March			323496
Total costs accounted for by the Baking Department			339021
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			15525
To complete inventory in process, March 1	0	2208	2208
Cost of completed March 1 work in process			17733
Started and completed in March	214380	95280	309660
Transferred to Finished goods in March			327393
Inventory in process, March 31	9180	2448	11628
Total costs assigned by the Baking Department			339021
1. Direct materials cost per equivalent unit $1.80
2. Conversion cost per equivalent unit $0.80
3. Cost of beginning work in process completed during March $17733
4. Cost of units started and completed during March $309660
5. Cost of the ending work in process $11628
b
Conversion cost per equivalent unit prior period = (15525-6900*1.80)/(6900*3/5)= $0.75
Conversion cost per equivalent unit increase