Question

Please answer Ex 18-8. Thanks

Ex 18-7 Equivalen units of production The following information concerns production in the Baking Department for May. All direct materials are placed in process at the begining of production. ACCOUNT Work in Process-Baking Department ACCOUNT NO. Balance Debit Credit Date Item Debit Credit May 11 Bal., 6,500 units, % completed Direct materials, 135,000 units Direct labor Factory overhead Goods finished, 137,200 units Bal. 2 units, completed 229,500 62,300 20,008 12,480 241,980 304,280 324,288 8,858 8,858 315,430 a) Determine the number of units in the work in process inventory at the end of the month. Begining inventory Add: production started Less: Finished goods Work in process 6,500 135,000 (137,200) 4,300 units b) Determine the equivalent units of production for direct materials and conversion costs in May. Baking Department. May. (Equivalent units of production for direct materials and conversion costs) Whole units Equivalen units Equivalent units (direct materials) (conversion) Inventory in process (May 1) 6,500 2,600 Started and completed in May 130,700 130,700 130,700 Transfered to finished goods in May 137,200 130,700 133,300 Inventory in process (May 31) 4,300 4,300 2,580 141,500 135,000 135,800 Total Ex 18-8 Costs per equivalent unit a) Based upon the data in Exercise 18-7, determine the following: 1. Direct materials cost per equivalent unit. 2. Conversion cost per equivalent unit. 3. Cost of the beginning work in process completed during May. 4. Cost of the units started and competed during May. 5. Cost of the ending work in process. b) Assuming that the equivalent materials cost is the same for April and May, did the conversion cost per equivalent unit increase, decrease, or remain the same in May?

Answer 1

Baking Department
FIFO Method:
		Equivalent Units
		DM		Conversion costs
	Whole units	%	Units	%	Units
Opening WIP	6500
Started	135000
Total Units to account for	141500
Opening WIP	6500	0	0	40	2600
Completed and tfd.( 137200 - 6500)	130700	100	130700	100	130700
Closing WIP	4300	100	4300	60	2580
Total Units to account for ( EUP)	141500		135000		135880
Cost Information
Costs to account for:	Materials	Conversion	Total
Op. WIP		12480	12480
Added during the period	229500	82308	311808	( 62300 + 20008 = 82308 )
Total costs to account for	229500	94788	324288
Cost per EUP :-
Cost to be accounted for	229500	82308	311808
EUP	135000	135880
Cost per EUP	1.7	0.605740359	2.305740359
Costs Accounted for:		Materials		Conversion	Total
Completed and tfd.
Opening WIP		0		12480	12480
Completed and tfd.	130700 * 1.7	222190	133300 * 0.606	80745.18987	302935.1899
Completed and tfd.		222190		93225.18987	315415.1899
Cl. WIP	4300 * 1.7	7310	2580 * 0.606	1562.810127	8872.810127
Total costs accounted for		229500		94788	324288
Cost reconciliation schedule
Costs Accounted for:
Transferred out			315415.1899
closing WIP
Materials		7310
Conversion costs		1562.810127	8872.810127
Total costs			324288
Since the format was not available, the question has been solved using this format.
Required answers :-
a.1 - $ 1.7
a.2 - $ 0.606
a.3 - 2600 * 0.606 = $ 1576 +12480 = $ 14056	( rounding off difference can be )
a.4 - 130700 * 2.306 = 301394
a.5 - $ 8873
b. CC per EUP ( opening WIP ) =( 12480 - 6500 * 1.7 )/ 6500 * 60 % = 1430 / 3900 = $ 0.37
It increased.