Costs per Equivalent Unlt The following Information concerns production In the B
ID: 2399023 • Letter: C
Question
Costs per Equivalent Unlt 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 Balance Date Item Debit Credit Debit Credit Mar. 1 Bal., 7,200 units, 3/5 completed 31 DIrect materlals, 129,600 units 31 DIrect labor 31 Factory overhead 31 Goods finished, 131,400 units 31 Bal. ? units, 3/5 completed 16,200 249,480 316,200 353,736 341,42412,312 12,312 233,280 66,720 37,536 a. Based on the above data, determine each cost listed below. Round "cost per equlvalent unit" answers to the nearest cent. 1. Direct materials cost per equivalent unit. 2. Conversion cost per equlvalent 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 materlals cost Is the same for February and March, did the converslon cost per equlvalent unit Increase, decrease, or remaln the same In March?Explanation / Answer
Calculation of equivalent units:
Opening 7200*2/5 = 2880
Finished from Introduced 129,600 units – closing Stock 5400 = 124200
Closing 5400*3/5 = 3240
Equivalent completed Units = 130,320
Working Note:
Closing Stock:
Opening Stock 7200
Introduced 129600
Less: Finished 131400
Closing units = 5400
1)Direct Material Cost per Equivalent Unit = 233280/130320 = $1.79
2.Conversion Cost = 66720+37536/130320 = 0.8
3.Cost of beginning WIP completed during month = 2880*2.59 = $7459.2
4.Cost of units started and completed during March = 124200*(1.79+0.8) = $321,678
5.Cost of ending WIP = 3240*2.59 = $8,391.6
Cost per Equivalent Unit for Feb = 16,200/(7200*3/5)
= 3.75
Which is more than March cost of 2.59
Since material cost is same, conversion cost has decreased in March