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., 9,300 units, 4/5 completed					16,182
	31	Direct materials, 167,400 units	217,620				233,802
	31	Direct labor	63,890				297,692
	31	Factory overhead	35,938				333,630
	31	Goods finished, 169,500 units			321,678		11,952
	31	Bal. ? units, 3/5 completed					11,952

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

Units charged to production:
Inventory in process, March 1			9300
Received from materials storeroom			167400
Total units accounted for by the Baking Department			176700
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	9300	0	1860
Started and completed in March	160200	160200	160200
Transferred to Packing Department in March	169500	160200	162060
Inventory in process, March 31	7200	7200	4320
Total units to be assigned costs	176700	167400	166380
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Baking Department		217620	99828
Total equivalent units		167400	166380
Cost per equivalent unit		1.30	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			16182
Costs incurred in March			317448
Total costs accounted for by the Baking Department			333630
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			16182
To complete inventory in process, March 1	0	1116	1116
Cost of completed March 1 work in process			17298
Started and completed in March	208260	96120	304380
Transferred to Packing Department in March			321678
Inventory in process, March 31	9360	2592	11952
Total costs assigned by the Baking Department			333630
a
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 $17298
4. Cost of units started and completed during March $304380
5. Cost of the ending work in process $11952
b
Conversion cost in beginning inventory=16182-(9300*1.30)= $4092
Conversion cost per equivalent unit = 4092/(9300*4/5)= $0.55
The conversion cost per equivalent unit increase