Question

1. Costs per Equivalent Unit and Production Costs

   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 $9,000 of direct materials.
   

   ACCOUNT Work in Process—Forging Department							ACCOUNT NO.
   Date		Item	Debit		Credit		Balance
   							Debit		Credit
   Nov.	1	Bal., 900 units, 60% completed					10,566
   	30	Direct materials, 12,900 units	123,840				134,406
   	30	Direct labor	21,650				156,056
   	30	Factory overhead	16,870				172,926
   	30	Goods transferred, ? units			?		?
   	30	Bal., 1,400 units, 70% completed					?

   Cost per equivalent units of $9.60 for Direct Materials and $3.00 for Conversion Costs.

   Based on the above data, determine each of the following amounts.

   If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar.

   a. Cost of beginning work in process inventory completed in November.
   $

   b. Cost of units transferred to the next department during November.
   $

   c. Cost of ending work in process inventory on November 30.
   $

   d. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process. If required, round your answers to two decimal places.

   Direct materials cost per equivalent unit	$
   Conversion cost per equivalent unit	$

   e. The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places.

   	Increase or Decrease	Amount
   Change in direct materials cost per equivalent unit	Decrease	$
   Change in conversion cost per equivalent unit	Increase	$

Answer 1

$ $ $ 11,646 1,56,546 16,380 a. Cost of beginning work in process inventory completed in November b. Cost of units transferred to the next department during November c. Cost of ending work in process inventory on November 30 d. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process. Direct materials cost per equivalent unit ($9,000 / 900) Conversion cost per equivalent unit ($1,566 / (900*60%) $ $ 10.00 2.90 e. The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places. Increase or Amount Decrease Change in direct materials cost per equivalent unit Decrease 0.40 Change in conversion cost per equivalent unit Increase 0.10 Explanation Conversion Particulars Beginning WIP Inventory Current period addition Total actual units Forging Department Computation of Equivalent unit (FIFO) Physical units Material 900 12,900 13,800 Units completed and transferred Beginning inventory Material - 0% Conversion - 40% Current year completed units Ending WIP Material - 100% Conversion - 70% Total Equivalent units 900 11,500 360 11,500 11,500 1,400 13,800 1,400 12,900 980 12,840

Particulars Current period cost Equivalent units Cost per equivalent unit Forging Department Computation of Cost per Equivalent unit Total cost Material Conversion $ 1,62,360 $ 1,23,840 $ 38,520 12,900 12,840 $ 9.60 $ 3.00 Material Conversion Forging Department Producton cost report - FIFO Particulars Total cost Cost from beginning WIP Inventory $ 10,566 Current period cost for beginning WIP Material - Conversion (360 X $3) $ 1,080 Total cost for beginning WIP (A) $ 11,646 $ - $ 1,080 1,10,400 Current period additional units cost Material (11,500 X $9.6) Conversion (11,500 X $3) Total Current period additional units cost (B) $ $ $ 1,10,400 $ 34,500 1,44,900 34,500 Total cost of unit transferred (C)= (A) + (B) $ 1,56,546 $ 13,440 Cost assigned to ending WIP Material (1,400 X $9.6) Conversion (1,400 X $3 X 70% Total cost of ending WIP (D. $ $ $ 13,440 2,940 2,9 16,380 2,940 Total cost of current period (E) = (C) + (D) $ 1,72,926 |