Question

Equivalent Units of Production

The Converting Department of Soft Touch Towel and Tissue Company had 640 units in work in process at the beginning of the period, which were 25% complete. During the period, 13,600 units were completed and transferred to the Packing Department. There were 720 units in process at the end of the period, which were 70% complete. Direct materials are placed into the process at the beginning of production.

Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0".

Soft Touch Towel and Tissue Company
Number of Equivalent Units of Production
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, beginning
Started and completed
Transferred to Packing Department
Inventory in process, ending
Total

Equivalent Units of Production

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
March	1	Bal., 5,400 units, 4/5 completed					21,600
	31	Direct materials, 97,200 units	194,400				216,000
	31	Direct labor	56,130				272,130
	31	Factory overhead	31,566				303,696
	31	Goods finished, 98,400 units			292,272		11,424
	31	Bal. ? units, 4/5 completed					11,424

a. Determine the number of units in work in process inventory at March 31.
units

b. Determine the equivalent units of production for direct materials and conversion costs in March. If an amount is zero, enter in "0".

Baking Department
Equivalent Units of Production for Direct Materials and Conversion Costs
For March
	Whole Units	Direct Materials Equivalent Units	Conversion Equivalent Units
Inventory in process, March 1
Started and completed in March
Transferred to finished goods in March
Inventory in process, March 31
Total

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., 8,100 units, 4/5 completed					20,250
	31	Direct materials, 145,800 units	277,020				297,270
	31	Direct labor	73,540				370,810
	31	Factory overhead	41,372				412,182
	31	Goods finished, 147,600 units			398,196		13,986
	31	Bal. ? units, 2/5 completed					13,986

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

Answer to first question in the list Soft Touch Towel and Tissue Company problem): Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the materials are introduced at the beginning itself, beginning inventory is 100% complete in terms of materials, 0% efforts would be required in current process or period and conversion costs also would require the uncompleted portion of costs in current process or period. That is, it was complete by 25% already and so 75% efforts would be required in current period. Units in ending inventory 720 Add: Units completed and transferred out 13,600 --> Of which 640 units shall be from beg. inventory; Bal. 12960 units from current. Less: Units in beginning inventory (640) Units started in the production 13,680 EUP- Materials Soft Touch Towel and Tissue Company Number of Equivalent Units of Production Whole Particulars Units Inventory in process, beginning 640 Started and completed 12,960 Transferred to Packing Department 13,600 Inventory in process, ending 720 Equivalent Units of Production (EUP) 14,320 % Materials 0% | 100% % EUP- Conversion Conversion 75% 480 100% 12,960 13,440 70% 504 13,944 [640 units x 0%; 640 units x 75%] [12960 units x 100%; 12960 units x 100%] 12,960 12,960 720 13,680 100% [720 units x 100%; 720 units x 70%]