Question

Exercise 3-9 Baden Company has gathered the following information. Units in beginning work in process 0 Units started into production 39,500 Units in ending work in process 7,800 Percent complete in ending work in process: Conversion costs 40 % Materials 100 % Costs incurred: Direct materials $78,100 Direct labor $63,000 Overhead $107,100 Compute equivalent units of production for materials and for conversion costs.Determine the unit costs of production. (Round unit costs to 2 decimal places, e.g. 2.25.)Show the assignment of costs to units transferred out and in process. (Round answers to 0 decimal places, e.g. 1,225.)

Answer 1

Step 1: Computation of equivalent units of production
Particulars	Material		Other Cost
	%	Units	%	Units
Finished Goods	100	31700	100	31700
Closing WIP	100	7800	40	3120
Equivalent Units		39500		34820

Step 2: Computation of Cost of Production per unit
Particulars	Materials	Direct Labour	Overhead	Total Cost
Cost incurred	78100	63000	107100	248200
Equivalent Units	39500	34820	34820
Per unit Cost	1.98	1.81	3.08	6.86

Step 3: Computation of cost of WIP
Particulars	Unit Cost	%	Amount
Material	1.98	100%	1.98
Direct Labour	1.81	40%	0.72
Overhead	3.08	40%	1.23
Total	6.86		3.93

Direct Material Cost per unit = $78,100 / 39,500 = $1.98

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