# 1. Costs per Equivalent Unit T

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:

1. Direct materials and conversion equivalent units of productionfor August
2. Direct materials and conversion costs per equivalent unit forAugust
3. Cost of goods finished during August
4. 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

 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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