The following information concerns production in the Baking Department for March

Question

The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.

a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.

b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?

ACCOUNT Work in Process—Baking Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Mar. 1 Bal., 4,800 units, 2/5 completed 11,232 31 Direct materials, 86,400 units 172,800 184,032 31 Direct labor 50,600 234,632 31 Factory overhead 28,456 263,088 31 Goods finished, 87,600 units 253,944 9,144 31 Bal. ? units, 3/5 completed 9,144

Explanation / Answer

b.

material at beginning = 4800 * 2 = 9600

Total cost - material = Conversion cost

11232-9600 = 1632 for conversion cost

Conversion cost per unit = 1632/4800*40% = 0.85

So conversion cost per equivalent unit increase from .85 to .90

FIFO method Beggining units 4800 Transferred out 87,600 Started into production 86400 Ending units 3,600 91200 91200 Equivalent units Material Conversion Beginning units 4800 4800 Completion in current period 0% 60% A 0 2880 Units started and completed 82800 82800 Completion 100% 100% B 82800 82800 Ending Units 3,600 3,600 Completion 100% 60% C 3600 2160 Total units A+B+C 86400 87840 Cost per equivalent units Per unit cost Cost Total units Per unit cost Material cost 172800 86400 2.00 Conversion cost 79056 87840 0.90 Total 251856 2.90

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