Question

Equivalent units of production and related costs: The charges to work in the Process-Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in the process at the beginning of production.

Bal. 9000 units, 40% completed 72,360	to finish goods, 41,500 units ?
Direct materials, 40,000 units @ $6.80 27,2000
Direct Labor 80,000
Factory overhead 40,450
Bal.. ? units 30% completed ?

a. The number of units in work process inventory at the end of the period.

b. Equivalent units of production for direct materials and conversion

c. Cost per equivalent unit for direct materials and conversion.

d. Cost of the units started and completed during the period.

Answer 1

a) Ending inventory Unit = Opening balance in Work in Process + Direct Material units - Finished goods units = 9000+40000-41500 = 7500 Units

b) Equivalent unit of production

	Whole Unit	EUP-Direct material	EUP-Conversion
Inventory in process, Beginning	9000	0	9000*60% = 5400
Started and completed	32500	32500	32500
Transferred to finished goods	41500	32500	37900
Inventory in process, Ending	7500	7500	2250 [7500*30/100]
Total	49000	40000	40150

c) Cost per equivalent unit

Direct material = 272000/40000 = 6.8

Conversion = (80000+40450)/40150 = 3

d) Cost of unit started and completed = [ 6.8 + 3 ] *32500 = $318500