Question

Costs per Equivalent Unit The following information concerns production in the Baking Department for December. All direct materials are placed in process at the beginning of production. ACCOUNT Work in Process-Baking Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Dec. 1 Bal., 24,000 units, 3/4 completed 116,700 31 Direct materials, 134,000 units 234,500 351,200 31 Direct labor 150,000 501,200 31 Factory overhead 375,000 876,200 31 Goods finished, 128,000 units 760,700 115,500 31 Bal., ? units, 1/2 completed 115,500 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

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

1 2 Direct metrial cost per equivalent unit 3 Conversion cost per equivalent unit 4 Cost of the beginning work in process completed durimg december 5 cost of units started and completed durig december 6 Cost of the ending work in process 7 Part b) 8 The correct answer is increase Answer 1.75 4.20 141900 618800 115500 9 Material 10 Explanation and calculations 11 12 Particular 13 Units to complete beginning inventory 14 Units started and completed (128000-4000) 15 units in ending inventory (24000+134000-128000) 16 Equivalent units Statement of Equivalent units Physical Units % completion 24000 104000 100 30000 100 134000 104000 30000 % completion Conversion Cost 25 6000 100 104000 50 15000 125000 134000 19 Particular 20 Equivalent units Material 134000 Conversion Cost 125000 Cost Per Equivalent Units 23 Particular 24 Cost incurred during the period 25 No. of equivalent units 26 Cost Per Equivalent Units Material 234500 134000 1.75 Conversion Cost 525000 125000 4.20

28 Particular Material Conversion Cost 29 Cost Per Equivalent Units 1.75 4.2 30 31 cost of beginning work in process = beginning inventory cost +Cost incurred to complete the beginning inventory 32 = 116700 + ( equivalent conversion units * cost per equivalent unit of conversion costs) 33 = 116700 + (6000*4.2) 34 = $ 141900 36 Costs of units started and completed during december 37 = no. of units started and completed * cost per equivalent unit 38 = 104000 *( 1.75+4.2) 39 = $ 618800 40 41 Cost of the ending work in process 42 = direct material cost + conversion cost 43 = 30000*1.75) + (15000*4.2) 44 = $ 115500 45 46 Conversion cost per equivalent unit for previous month 47 = (116700 - (24000*1.75))/(24000*75) 48 = $4.15 50 Thus the converion cost has increased.