Question

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., 6,600 units, 4/5 completed 17,688 31 Direct materials, 118,800 units 237,600 255,288 31 Direct labor 67,430 322,718 31 Factory overhead 37,924 360,642 31 Goods finished, 120,300 units 348,606 12,036 31 Bal., 2 units, 2/5 completed 12,036 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

Conversion Cost Beginning Units Started during the month Total Units available Units completed Ending Units Concerns Productions Equivalent Production Units statement- Baking Department For the Month of December Whole Units Direct Materials 6,600 118,800 125,400 (120,300) 5,100 Calculation of Equivalent Units Beginning Inventory in Process (0, 1/5 complete) Units started and completed during the month (120,300 - 6,600) Total units transferred to Finished goods Ending Inventory in Process (1, 2/5 complete) Total Equivalent units 6,600 113,700 120,300 5,100 125,400 113,700 113,700 5,100 118,800 1,320 113,700 115,020 2,040 117,060

Concerns Productions Equivalent Production Cost statement- Baking Department For the Month of December Total Direct Materials Total cost incurred during the month (a) 342,954 237,600 Equivalent Production units (b) 118,800 Cost per equivalent units (a/b) 2.00 Cost Charged to Production Inventory in process, December 1 17,688 Cost incurred in December 342,954 Total Cost Accounted 360,642 Conversion Cost 105,354 117,060 $ 0.90 Total Direct Materials Conversion Cost 17,688 1,188 1,188 18,876 227,400 Cost of Equivalent units Beginnig cost Cost of Beginning completed in December Direct Materials (0 units x 2.00) Conversion cost (1,320 units x 0.90) Total Cost of Beginning WIP (a) Cost of Units completed and started during the month Direct Materials ( 113,700 units x 2.00) Conversion cost (113,700 units x 0.90) Total cost of units completed and started during the month (b) Total cost of units completed and started (a+b) Cost of Ending Work in Process Direct Materials ( 5,100 units x 2.00) Conversion cost (2,040 units x 0.90) Total cost of Ending work in process Total cost accounted 102,330 227,400 102,330 329,730 348,606 10.200 10,200 1,836 1,836 12,036 360,642

$ a) Direct Materials cost per equivalent Units b) Conversion cost per equivalent units c) Cost of Beginning work in process completed during the December d) Cost of units started and completed during December e) Cost of the ending work in process 2.00 0.90 18,876 329,730 12,036 $ $ b. Convesrsion cost per equivalent unit will increase in December. $ Direct Material Cost in December Direct Material Units Cost per Unit 237,600 118,800 2.00 $ Cost of Direct Material in beginning Work in process (6,600 x 2.00) Beginning Work in Process Conversion cost in Beginning WIP (17,688 - 13,200) Equivalent unit of Conversion cost on December 1, Beginning WIP (6,600 x 4/5) Cost per Equivalent Unit ($ 4,488 /5,280) $ 13,200 17,688 4,488 5,280 0.85 Conversion Cost increase from $0.85 to $0.90