Question

Cost per Equivalent Unit

The cost of direct materials transferred into the Rolling Department of Kraus Company is $451,200. The conversion cost for the period in the Rolling Department is $289,750. The total equivalent units for direct materials and conversion are 2,400 tons and 4,750 tons, respectively.

Determine the direct materials and conversion costs per equivalent unit.

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

Cost of Units Transferred Out and Ending Work in Process

The costs per equivalent unit of direct materials and conversion in the Rolling Department of Kraus Steel Company are $0.85 and $2.95, respectively. The equivalent units to be assigned costs are as follows:

	Equivalent Units
	Direct Materials		Conversion
Inventory in process, October 1	0		5,000
Started and completed during October	63,000		63,000
Transferred out of Rolling (completed)	63,000		68,000
Inventory in process, October 31	5,000		1,500
Total units to be assigned costs	68,000		69,500

The beginning work in process inventory on October 1 had a cost of $3,000. Determine the cost of completed and transferred-out production, the ending work in process inventory, and the total costs assigned by the Rolling Department.

Completed and transferred-out production	$
Inventory in process, October 31	$
Total costs assigned by the Rolling Department	$

Answer 1

1
Direct materials cost per equivalent unit	188	=451200/2400
Conversion cost per equivalent unit	61	=289750/4750

2
Completed and transferred-out production	257150
Inventory in process, October 31	8675
Total costs assigned by the Rolling Department	265825

Workings:
	Direct materials	Conversion	Total
Beginning work in process inventory			3000
To complete Inventory in process, October 1	0	14750	14750	=5000*2.95
Cost of units Started and completed	53550	185850	239400
Completed and transferred-out production			257150
	Direct materials	Conversion	Total
Inventory in process, October 31	5000	1500
X Costs per equivalent unit	0.85	2.95
Inventory in process, October 31	4250	4425	8675