Costs per Equivalent Unit and Production Costs The following information concern
ID: 2466300 • Letter: C
Question
Costs per Equivalent Unit and Production Costs
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 $92,020 of direct materials.
ACCOUNT Work in Process—Forging Department
ACCOUNT NO.
Date
Item
Debit
Credit
Balance
Debit
Credit
Sept.
1
Bal., 8,600 units, 60% completed
104,404
30
Direct materials, 78,000 units
819,000
923,404
30
Direct labor
84,060
1,007,464
30
Factory overhead
116,090
?
1,123,554
30
Goods finished, ? units
?
30
Bal., 6,900 units, 80% completed
?
Based on the above data, determine each of the following amounts.
If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar.
a. Cost of beginning work in process inventory completed in September.
$
b. Cost of units transferred to the next department during September.
$
c. Cost of ending work in process inventory on September 30.
$
d. Costs per equivalent unit of direct materials and conversion included in the September 1 beginning work in process. If required, round your answers to two decimal places.
Direct materials cost per equivalent unit
$
Conversion cost per equivalent unit
$
e. The September increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places.
Increase or Decrease
Amount
Change in direct materials cost per equivalent unit
Decrease
Decrease
Increase
$
Change in conversion cost per equivalent unit
Increase
Decrease
Increase
$
ACCOUNT Work in Process—Forging Department
ACCOUNT NO.
Date
Item
Debit
Credit
Balance
Debit
Credit
Sept.
1
Bal., 8,600 units, 60% completed
104,404
30
Direct materials, 78,000 units
819,000
923,404
30
Direct labor
84,060
1,007,464
30
Factory overhead
116,090
?
1,123,554
30
Goods finished, ? units
?
30
Bal., 6,900 units, 80% completed
?
Explanation / Answer
Equivalent units:
a) Cost of beginning work in process inventory completed in September.
Opening cost of WIP = $104404
+ addition made 3440 * 2.50 = $8600
Total completed cost of Opening WIP = $113004
b) Cost of units transferred to the next department during September:
Opening WIP - TOTAL cost = $113004
+ Units introduced and completed:
71100 * (10.50 + 2.50) = $924300
Total cost of transfered units = $1037304
c) Cost of ending work in process inventory on September 30:
6900 * 10.50 + 5520 * 2.50 = $86250
d) Cost per unit of material and conversion costs at Beginning WIP:
Material = 92020 / 8600 = $10.70
conversion costs = 12384 / 8600 * 0.60 = $2.40
e) Change in direct materials cost per equivalent unit Decrease by $0.20
Change in conversion cost per equivalent unit Increase by $0.10
Physical units Material Conversion cost Opening WIP 8600 - 3440 (40%) Units introduced and Finished 71100 71100 71100 Units transferred to next department 79700 Ending WIP 6900 6900 5520 (80%) Equivalent units 78000 80060 Costs incurred 819000 200150 Cost per equivalent unit $10.50 $2.50