Cost per Equivalent Unit The following information concerns production in the Fo

Question

Cost per Equivalent Unit The following information concerns production in the Forging Department for September. 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 $43,180 of direct materials. ACCOUNT Work in Process—Forging Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Sept. 1 Bal., 3,400 units, 30% completed 46,444 30 Direct materials, 31,000 units 384,400 430,844 30 Direct labor 45,890 476,734 30 Factory overhead 63,373 ? 540,107 30 Goods finished, ? units ? 30 Bal., 2,700 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 $ 12.4 Cost per equivalent unit of conversion $ c. Determine the cost of units started and completed in September. $

Explanation / Answer

Solution a:

Nos of units transferred to next department = Beginning units in WIP + Unit started - Units in ending WIP = 34000 + 31000 - 2700 = 31700 units

Solution b:

Solution c:

Cost of units started and completed in september = 28300 * $12.40 + 28300*$3.30 = $444,310

Forging Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 3400 Units started this period 31000 Total unit to be accounted for 34400 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 70% 3400 0 2380 Started and completed currently 28300 28300 28300 Units in ending WIP
Material - 100%
Conversion - 90% 2700 2700 2430 Total units accounted for 34400 31000 33110

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