Question

Costs per Equivalent Unit and Production Costs The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $54,180 of direc materials. ACCOUNT Work in Process-Forging Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Nov. 58,695 538,395 1 Bal., 4,300 units, 50% completed 30 Direct materials, 39,000 units 30 Direct labor 30 Factory overhead 479,700 37,390 51,644 575,785 ? 627,429 30 Goods finished, ? units 30 Bal., 3,400 units, 80% completed Cost per equivalent units of $12.30 for Direct Materials and $2.20 for Conversion Costs. Based on the above data, determine each of the following amounts. If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar. a. Cost of beginning work in process inventory completed in November.

Answer 1

a) Cost of beginning work in process completed in November = (58695+4300*50%*2.20) = 63425

b) Cost of unit started and completed = (12.30+2.20*39900)+63425 = 641975

c) Cost of ending WIP = (3400*12.30+3400*80%*2.2) = 47804

d) Cost per equivalent unit of material = 54180/4300 = 12.60

Cost per equivalent unit of conversion = (58695-54180)/2150 = 2.10

e) Calculate following

	Increase or decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	0.30
Change in conversion cost per equivalent unit	Increase	0.10