Question

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., 5,100 units, 2/5 completed					7,752
	31	Direct materials, 91,800 units	119,340				127,092
	31	Direct labor	35,830				162,922
	31	Factory overhead	20,150				183,072
	31	Goods finished, 93,000 units			176,598		6,474
	31	Bal., ? units, 3/5 completed					6,474

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?
Decrease/ Increase / Remain the same

Answer 1

Ending work in process = 5100+91800-93000 = 3900

Equivalent unit of material = (5100*0%+91800*100%+3900*100%) = 95700

Equivalent unit of conversion = (5100*3/5+91800*100%+3900*3/5) = 97200

1) Direct material Cost per equivalent unit = 119340/95700 = 1.24

2) Conversion Cost per equivalent unit = (35830+20150)/97200 = .57

3) Cost of beginning work in process completed = (3060*.57+7752) = 9496.2

4) Cost of units started and completed = 91800*1.81(.57+1.24) = 166158

5) Ending work in process = (3900*1.24+1950(3900*.50)*.57) = 5948

b) Direct material cost in beginning work in process = 5100*1.24 = 6324

Conversion Cost in beginning work in process = 119340-6324 = 113016

Conversion Cost per equivalent unit in beginning WIP = 113016/2040(5100*2/5) = 55.4

Conversion Cost per equivalent unit decrease by (55.4-1.24) = 54.16 per unit