Cost per Equivalent Unit [LO 3] The balance in beginning Work in Process at Bing

Question

Cost per Equivalent Unit [LO 3]

The balance in beginning Work in Process at Bing Rubber Company for direct labor was $152,300. During the month of March, an additional $1,426,600 of direct labor was incurred, and 34,900 pounds of rubber were produced. At the end of March, 13,300 pounds of rubber were in process and the units were 50 percent complete. At the start of March, the company had 6,850 pounds of rubber that were 40 percent complete.

Calculate the cost per equivalent unit for labor assuming that labor is added uniformly throughout the production process.

Explanation / Answer

Cost per equivalent unit calculation: Cost                                                                       Labor Beginning WIP                                                        $152,300 Cost incurred during the month                                1,426,600                                                                            _______________ Total                                                                     $1,578,900                                                                             ________________ Units Units completed                                                          34,900 Equivalent units ,ending WIP(50%complete)                   6,650 (13,300*50%=6,650 poounds)                                                                              _________________ Total                                                                            41,550                                                                              _________________ Cost per equivalent unit = Cost in beginning WIP + Cost incurred in current period                                           Units completed + Equivalent units in ending WIP Cost per equivalent unit = $1,578,900/41,550                                      = $38                                           Units completed + Equivalent units in ending WIP Cost per equivalent unit = $1,578,900/41,550                                      = $38

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