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.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Dec.	1	Bal., 8,100 units, 2/5 completed					13,122
	31	Direct materials, 145,800 units	204,120				217,242
	31	Direct labor	56,400				273,642
	31	Factory overhead	31,728				305,370
	31	Goods finished, 147,600 units			295,038		10,332
	31	Bal., ? units, 2/5 completed					10,332

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

		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, December 1	8100	0	4860
Started and completed in December	139500	139500	139500
Transferred to Finished goods in December	147600	139500	144360
Inventory in process, December 31	6300	6300	2520
Total units to be assigned costs	153900	145800	146880
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for December in Baking Department		204120	88128
Total equivalent units		145800	146880
Cost per equivalent unit		1.40	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, December 1			13122
Costs incurred in December			292248
Total costs accounted for by the Baking Department			305370
Cost allocated to completed and partially completed units:
Inventory in process, December 1 balance			13122
To complete inventory in process, December 1	0	2916	2916
Cost of completed December 1 work in process			16038
Started and completed in December	195300	83700	279000
Transferred to Finished goods in December			295038
Inventory in process, December 31	8820	1512	10332
Total costs assigned by the Baking Department			305370
1. Direct materials cost per equivalent unit $1.40
2. Conversion cost per equivalent unit $0.60
3. Cost of beginning work in process completed during December $16038
4. Cost of units started and completed during December $279000
5. Cost of the ending work in process $10332
b
Conversion cost per equivalent unit prior period = (13122-8100*1.40)/(8100*2/5)= $0.55
Conversion cost per equivalent unit increase