Question

Cornerstone Exercise 6.6 (Algorithmic) Nonuniform Inputs Apeto Company produces premium chocolate candy bars. Conversion costs are added uniformly. For February, EWIP is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the process. The following information is provided for February: Physical flow schedule: Units to account for: Units in BWIP 0 Units started 70,000 Total units to account for 70,000 Units to account for: Units completed: From BWIP 0 Started and completed 45,000 45,000 Units in EWIP 25,000 Total units accounted for 70,000 Inputs Direct Materials Conversion Costs $28,000 $82,500 Required: 1. Calculate the equivalent units for each input category. Equivalent Units Direct Materials 70000 Conversion 2. Calculate the unit cost for each category and in total. If required, round your answers to the nearest cent. Unit direct materials cost $ Unit conversion cost $ Total unit cost $ 3. What if a different type of materials is also added at the end of the process (a candy wrapper), costing $13,500? Calculate the new unit cost. If required, round your answer to the nearest cent. $ per unit.

Answer 1

Part 1

	Direct materials	Conversion costs
Units completed	45000	45000
Units EWIP * Fraction Complete
25000*100%	25000
25000*40%		10000
Equivalent Units	70000	55000

Part 2

Unit direct material cost (28000/70000)	0.40
Unit conversion cost (82500/55000)	1.50
Total unit cost	$1.90

Part 3

Cost of new material	13500
Equivalent Units	45000 (45000+(25000*0%)
NEW Unit DM Cost	0.30
Old unit cost	1.90
NEW TOTAL UNIT COST	$2.20 per unit