Question

Cost per Equivalent Unit

The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $50,040 of direct materials.

ACCOUNT Work in Process—Forging Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Nov.	1	Bal., 3,600 units, 80% completed					60,120
	30	Direct materials, 33,000 units	452,100				512,220
	30	Direct labor	50,550				562,770
	30	Factory overhead	69,798		?		632,568
	30	Goods finished, ? units					?
	30	Bal., 2,900 units, 90% completed					?

a. Determine the number of units transferred to the next department.
units

b. Determine the costs per equivalent unit of direct materials and conversion. If required, round your answer to two decimal places.

Cost per equivalent unit of direct materials	$
Cost per equivalent unit of conversion	$

c. Determine the cost of units started and completed in November.
$

Answer 1

Solution

Units transferred= 33,700 units

	Material	Conversion
Cost per equivalent Unit	$           13.70	$                   3.60

Cost of units started and completed= $520,730

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed	% completed this period
	Material	Conversion	Material	Conversion
Beginning WIP	3,600	100%	80%	0%	20%
Units introduced	33,000
Total units to be accounted for	36,600
Completed and Transferred unit	33,700	0%	0%	100%	100%
Ending WIP	2,900	0%	0%	100%	90%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material	Conversion
Units Transferred:	% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	3,600	0%	-	20%	720
From units started/Introduced	30,100	100%	30,100	100%	30,100
Total	33,700		30,100		30,820
	Total Units	Material	Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	2,900	100%	2,900	90%	2,610
Total EUP	36,600		33,000		33,430

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material	Conversion	TOTAL
Cost incurred in Current Period	$ 452,100	$ 120,348	$ 572,448
Total Equivalent Units	33,000	33,430
Cost per Equivalent Units	$ 13.70	$ 3.60	$ 17.30
Cost of Beginning WIP	$ 50,040	$ 10,080	$ 60,120
Total cost to be accounted for	$ 632,568

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred	33,700.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	-	$ 13.70	$ 0
	Conversion	720	$ 3.60	$ 2,592	$ 2,592
B	From units started & completed
	Material	30,100	$ 13.70	$ 412,370
	Conversion	30,100	$ 3.60	$ 108,360	$ 520,730