Question

Cost per Equivalent Unit

The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $100,430 of direct materials.

ACCOUNT Work in Process—Forging DepartmentACCOUNT NO.

DateItemDebitCreditBalance

DebitCredit

Nov.1Bal., 8,300 units, 70% completed  115,536  

30Direct materials, 76,000 units896,800  1,012,336  

30Direct labor88,260  1,100,596  

30Factory overhead121,881 ? 1,222,477  

30Goods finished, ? units  ?  

30Bal., 6,600 units, 90% completed  ?  

a. Determine the number of units transferred to the next department.
units

b. Determine the costs per equivalent unit of direct materials and conversion. If required, round your answer to two decimal places.

Cost per equivalent unit of direct materials$

Cost per equivalent unit of conversion$

c. Determine the cost of units started and completed in November.
$

Answer 1

Solution

a.   the number of units transferred to the next department=8300+76000-6600

=77,700 units

b.   costs per equivalent unit :

Equivalent units;

	Whole units	Direct material	Conversion
Inventory in process,Nov 1(70% complete)	8300	0	2490(8300×30%)
Started and complete in Nov	69,400 (77,700-8300)	69,400	69,400
Transfer to finished good in Nov	77,700	69,400	71,890
Inventory in process, Nov 30 (90% complete)	6600	6600	5,940(6600×90%)
Equivalent units	84,300	76,000	77,830

Cost per equivalent unit:

	Direct material	Conversion
Total costs for Nov. In Forgoing Department	$896,800	$210,141 (88,260+121,881)
Equivalent units	76,000	77,830
Cost per equivalent unit	$11.8	$2.7

c. cost of units started and completed in November:

=$1,006,300[69,400×(11.8+2.7)]