1. Costs per Equivalent Unit T
January 18th, 2023
1.
Costs per Equivalent Unit
The following information concerns production in the BakingDepartment for March. All direct materials are placed in process atthe beginning of production.
| ACCOUNT Work in Process—BakingDepartment | ACCOUNT NO. | ||||||||
| Date | Item | Debit | Credit | Balance | |||||
| Debit | Credit | ||||||||
| Mar. | 1 | Bal., 9,000 units, 4/5 completed | 21,600 | ||||||
| 31 | Direct materials, 162,000 units | 291,600 | 313,200 | ||||||
| 31 | Direct labor | 81,750 | 394,950 | ||||||
| 31 | Factory overhead | 45,978 | 440,928 | ||||||
| 31 | Goods finished, 164,100 units | 426,300 | 14,628 | ||||||
| 31 | Bal. ? units, 2/5 completed | 14,628 | |||||||
a. Based on the above data, determine each costlisted below. Round “cost per equivalent unit” answers to thenearest cent.
| 1. Direct materials cost per equivalent unit | $ |
| 2. Conversion cost per equivalent unit | $ |
| 3. Cost of the beginning work in process completed duringMarch | $ |
| 4. Cost of units started and completed during March | $ |
| 5. Cost of the ending work in process | $ |
b. Assuming that the direct materials cost isthe same for February and March, did the conversion cost perequivalent unit increase, decrease, or remain the same inMarch?
2.
Cost of Production Report
The debits to Work in Process—Roasting Department for MorningBrew Coffee Company for August, together with informationconcerning production, are as follows:
| Work in process, August 1, 900 pounds, 50%completed | $5,085* | |||
| *Direct materials (900 X $4.7) | $4,230 | |||
| Conversion (900 X 50% X $1.9) | $855 | |||
| $5,085 | ||||
| Coffee beans added during August, 28,000pounds | 130,200 | |||
| Conversion costs during August | 55,220 | |||
| Work in process, August 31, 1,400 pounds, 40%completed | ? | |||
| Goods finished during August, 27,500 pounds | ? | |||
All direct materials are placed in process at the beginning ofproduction.
a. Prepare a cost of production report,presenting the following computations:
- Direct materials and conversion equivalent units of productionfor August
- Direct materials and conversion costs per equivalent unit forAugust
- Cost of goods finished during August
- Cost of work in process at August 31
If an amount is zero, enter in “0”. For the cost per equivalentunit, round your answer to two decimal places.
| Morning Brew Coffee Company | |||
| Cost of Production Report-Roasting Department | |||
| For the Month Ended August 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, August 1 | |||
| Received from materials storeroom | |||
| Total units accounted for by the RoastingDepartment | |||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials (1) | Conversion (1) | |
| Inventory in process, August 1 | |||
| Started and completed in August | |||
| Transferred to finished goods in August | |||
| Inventory in process, August 31 | |||
| Total units to be assigned costs | |||
| Cost Information | |||
| Costs per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for August in Roasting Department | $ | $ | |
| Total equivalent units | |||
| Cost per equivalent unit (2) | $ | $ | |
| Costs assigned to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, August 1 | $ | ||
| Costs incurred in August | |||
| Total costs accounted for by the RoastingDepartment | $ | ||
| Costs allocated to completed and partiallycompleted units: | |||
| Inventory in process, August 1 balance | $ | ||
| To complete inventory in process, August 1 | $ | $ | |
| Cost of completed August 1 work in process | $ | ||
| Started and completed in August | |||
| Transferred to finished goods in August (3) | $ | ||
| Inventory in process, August 31 (4) | |||
| Total costs assigned by the RoastingDepartment | $ | ||
b. Compute and evaluate the change in cost perequivalent unit for direct materials and conversion from theprevious month (July). If required, round your answers to thenearest cent.
| Increase or Decrease | Amount | |
| Change in direct materials cost per equivalent unit | $ | |
| Change in conversion cost per equivalent unit |
Answer:
| 1 | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, March 1 | 9000 | 0 | 1800 |
| Started and completed in March | 155100 | 155100 | 155100 |
| Transferred to Finished goods in March | 164100 | 155100 | 156900 |
| Inventory in process, March 31 | 6900 | 6900 | 2760 |
| Total units to be assigned costs | 171000 | 162000 | 159660 |
| Cost Information | |||
| Costs per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for March in Baking Department | 291600 | 127728 | |
| Total equivalent units | 162000 | 159660 | |
| Cost per equivalent unit | 1.80 | 0.80 | |
| Costs charged to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, March 1 | 21600 | ||
| Costs incurred in March | 419328 | ||
| Total costs accounted for by the Baking Department | 440928 | ||
| Cost allocated to completed and partially completed units: | |||
| Inventory in process, March 1 balance | 21600 | ||
| To complete inventory in process, March 1 | 0 | 1440 | 1440 |
| Cost of completed March 1 work in process | 23040 | ||
| Started and completed in March | 279180 | 124080 | 403260 |
| Transferred to Finished goods in March | 426300 | ||
| Inventory in process, March 31 | 12420 | 2208 | 14628 |
| Total costs assigned by the Baking Department | 440928 | ||
| 1. Direct materials cost per equivalent unit$1.80 | |||
| 2. Conversion cost per equivalent unit $0.80 | |||
| 3.Cost of beginning work in process completed during March$23040 | |||
| 4.Cost of units started and completed during March$403260 | |||
| 5. Cost of the ending work in process $14628 | |||
| b | |||
| Conversion cost per equivalent unit prior period =(21600-9000*1.80)/(9000*4/5)= $0.75 | |||
| Conversion cost per equivalent unit increase | |||
| 2 | |||
| Morning Brew Coffee Company | |||
| Cost of Production Report-Roasting Department | |||
| For the Month Ended August 31 | |||
| Unit Information | |||
| Units charged to production: | |||
| Inventory in process, August 1 | 900 | ||
| Received from materials storeroom | 28000 | ||
| Total units accounted for by the Roasting Department | 28900 | ||
| Units to be assigned costs: | |||
| Equivalent Units | |||
| Whole Units | Direct Materials | Conversion | |
| Inventory in process, August 1 | 900 | 0 | 450 |
| Started and completed in August | 26600 | 26600 | 26600 |
| Transferred to finished goods in August | 27500 | 26600 | 27050 |
| Inventory in process, August 31 | 1400 | 1400 | 560 |
| Total units to be assigned costs | 28900 | 28000 | 27610 |
| Cost Information | |||
| Costs per equivalent unit: | |||
| Direct Materials | Conversion | ||
| Total costs for August in Roasting Department | 130200 | 55220 | |
| Total equivalent units | 28000 | 27610 | |
| Cost per equivalent unit | 4.65 | 2.00 | |
| Costs charged to production: | |||
| Direct Materials | Conversion | Total | |
| Inventory in process, August 1 | 5085 | ||
| Costs incurred in August | 185420 | ||
| Total costs accounted for by the Roasting Department | 190505 | ||
| Cost allocated to completed and partially completed units: | |||
| Inventory in process, August 1 balance | 5085 | ||
| To complete inventory in process, August 1 | 0 | 900 | 900 |
| Cost of completed August 1 work in process | 5985 | ||
| Started and completed in August | 123690 | 53200 | 176890 |
| Transferred to finished goods in August | 182875 | ||
| Inventory in process, August 31 | 6510 | 1120 | 7630 |
| Total costs assigned by the Roasting Department | 190505 | ||
| b | |||
| Increase or Decrease | Amount | ||
| Change in direct materials cost per equivalent unit | Decrease | 0.05 | =4.70-4.65 |
| Change in conversion cost per equivalent unit | Increase | 0.10 | =2.00-1.90 |
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