Problem

Lavalear Corporation uses a process costing system and traces costs through several proces...

Lavalear Corporation uses a process costing system and traces costs through several processing departments, starting with the Bonding Department. Shown below is information taken from the Bonding Department's September production cost report:

Cost Data: Bonding Department

Direct materials costs in beginning inventory, September 1

$ 50,400

Conversion costs in beginning inventory, September 1

36,000

Direct materials costs incurred in September

789,750

Conversion costs incurred in September

787,500

Physical Units: Bonding Department

Units in process, September 1

300

Units transferred out during September

1,500

Units in process, September 30

500

Percentages of Completion: Bonding Department

Direct materials, September 1

40%

Conversion, September 1

25

Direct materials, September 30

75%

Conversion, September 30

30

a.   Compute the cost per equivalent unit of direct materials and conversion carried forward from August and assigned to the Bonding Department's beginning inventory on September I.

b.  Compute the cost per equivalent unit of direct materials and conversion incurred by the Bonding Department in September.

c.    Discuss how the cost figures computed in parts a and b would be useful to the company's management.

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