Question

Equivalent Units of Conversion Costs

The Filling Department of Eve Cosmetics Company had 3,900 ounces in beginning work in process inventory (20% complete). During the period, 35,800 ounces were completed. The ending work in process inventory was 2,900 ounces (60% complete).

What are the total equivalent units for conversion costs?

If required, round to the nearest unit.

--------- units

2.  

Cost per Equivalent Unit

The cost of direct materials transferred into the Filling Department of Eve Cosmetics Company is $412,080. The conversion cost for the period in the Filling Department is $99,520. The total equivalent units for direct materials and conversion are 60,600 ounces and 62,200 ounces, respectively.

Determine the direct materials and conversion costs per equivalent unit. If required, round to the nearest cent.

Direct materials cost per equivalent unit:	$ per ounce
Conversion costs per equivalent unit:	$ per ounce

Answer 1

Part 1) Calculation of Equivalent units for conversion costs

	Percentage of completion	Equivalent units
Opening WIP 3900	20%	780
Completed & transferred 35800	100%	35800
Closing WIP 2900	60%	1740
Equivalent units for conversion costs		38320

Part 2) Calculation of cost per equivalent unit

Direct material cost per equivalent unit

=Total cost of direct materials/Equivalent units for direct materials

=412080/60600=$6.8

Conversion cost per equivalent unit

=Total conversion cost/Equivalent units for conversion

=99520/62200=$1.6