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., 4,800 units, 2/5 completed					7,296
	31	Direct materials, 86,400 units	112,320				119,616
	31	Direct labor	33,730				153,346
	31	Factory overhead	18,974				172,320
	31	Goods finished, 87,600 units			166,344		5,976
	31	Bal. ? units, 3/5 completed					5,976

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.	$

Answer 1

Solution

1. Direct materials cost per equivalent unit.	$ 1.30
2. Conversion cost per equivalent unit.	$ 0.60
3. Cost of the beginning work in process completed during March.	$ 9,024
4. Cost of units started and completed during March.	$ 157,320
5. Cost of the ending work in process.	$ 5,976

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	4,800	100%	40%	0%	60%
Units introduced	86,400
Total units to be accounted for	91,200
Completed and Transferred unit	87,600	0%	0%	100%	100%
Ending WIP	3,600	0%	0%	100%	60%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	4,800	0%	-	60%	2,880
From units started/Introduced	82,800	100%	82,800	100%	82,800
Total	87,600		82,800		85,680
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	3,600	100%	3,600	60%	2,160
Total EUP	91,200		86,400		87,840

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 112,320		$ 52,704		$ 165,024
Total Equivalent Units	86,400		87,840
Cost per Equivalent Units	$ 1.30		$ 0.60		$ 1.90
Cost of Beginning WIP					$ 7,296
Total cost to be accounted for					$ 172,320

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		87,600.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	-	$ 1.30	$ 0
	Conversion cost	2,880	$ 0.60	$ 1,728	$ 1,728
B	From units started & completed
	Material	82,800	$ 1.30	$ 107,640
	Conversion cost	82,800	$ 0.60	$ 49,680	$ 157,320
C=A+B	Total				$ 159,048
D	Cost of Beginning WIP				$ 7,296
E=C+D	Total Cost of Units transferred				$ 166,344
	Cost of	Ending WIP		3,600.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	3,600	$ 1.30	$ 4,680
G	Conversion cost	2,160	$ 0.60	$ 1,296
H = F + G	Total Cost of Ending WIP				$ 5,976
I = E + H	Total Cost accounted for				$ 172,320
J	Rounding Off Differences				$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$ 172,320