Question

The following information concerns production in the Baking Department for December. All direct materials are placed in process at the begin of production ACCOUNT Work in Process-Baking Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Dec. 1 Bal., 6,000 units, 2/5 completed 31 Direct materials, 108,000 units 31 Direct labor 12,600 207,000 194,400 55,760 31,360 262,760 31 Factory overhead 294,120 284,580 9,540 31 Goods finished, 109,500 units 31 Bal., 2 units, 2/5 completed 9.540 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 December 4. Cost of units started and completed during December 5. Cost of the ending work in process b. Assuming that the direct materials cost is the same for November and December, did the conversion cost per equivalent unit increase decrease or remain the same in December

Answer 1

Part A

1	Direct materials cost per equivalent unit	$1.80
2	Conversion cost per equivalent unit.	$0.80
3	Cost of the beginning work in process completed during March (12600+(3600*0.80))	$15480
4	Cost of units started and completed during March (103500*(1.80+0.80))	$269100
5	Cost of the ending work in process (4500*1.80)+(1800*0.80)	$9540

Part 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

Increases

Explanation:

	Physical units
Beginning work in process	6000
Units started during the month of march	108000
Total units accounted for	114000
Transferred out	109500
Ending work in process	4500
Total units accounted for	114000

	Physical units	Equivalent units
		Direct materials	Conversion costs
Beginning work in process	6000	0	3600 (6000*3/5)
Units started and completed (109500-6000)	103500	103500	103500
Ending work in process	4500	4500	1800 (4500*2/5)
Equivalent units	114000	108000	108900

	Direct materials	Conversion costs	Total
Beginning work in process			12600
Cost incurred during the period	194400	87120	281520
Total	194400	87120	294120
Equivalent units	108000	108900
Equivalent cost per unit	1.80	0.80

55760+31360 = 87120