Question

The following information concerns production in the Baking Department for March. 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
Mar.	1	Bal., 7,200 units, 4/5 completed					12,528
	31	Direct materials, 129,600 units	168,480				181,008
	31	Direct labor	49,490				230,498
	31	Factory overhead	27,838				258,336
	31	Goods finished, 131,400 units			249,372		8,964
	31	Bal. ? units, 3/5 completed					8,964

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 March	$
4. Cost of units started and completed during March	$
5. Cost of the ending work in process	$

b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?

Answer 1

a1) Direct material cost per equivalent unit = 168480/129600 = 1.3

a2) Equivalent unit of conversion = (7200*1/5)+124200+(5400*3/5) = 128880

Cost per equivalent unit of conversion = (49490+27838)/128880 = 0.60

a3) Cost of beginning WIP = (1440*.60)+12528 = 13392

a4) Cost of unit transferred and completed = 1.9*124200 = 235980

a5) Cost of ending WIP = (5400*1.3+3240*.60) = 8964

b) Direct material cost = 7200*1.3 = 9360

Conversion Cost in Beginning WIP = 12528-9360 = 3168

Conversion Cost per EUP = 3168/5760 = 0.55

Increase by 0.05