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., 5,400 units, 2/3 completed 9,540 31 Direct materials, 97,200 units 136,080 145,620 31 Direct labor 37,690 183,310 31 Factory overhead 21,206 204,516 31 Goods finished, 98,400 units 196,620 7,896 31 Bal. ? units, 4/5 completed 7,896

Explanation / Answer

Cost of Production Report-Baking Department For the Month Ended March 31 Unit Information Units charged to production: Inventory in process, March 1 5400 Received from materials storeroom 97200 Total units accounted for by the Baking Department 102600 Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, March 1 5400 0 1800 Started and completed in March 93000 93000 93000 Transferred to Packing Department in March 98400 93000 94800 Inventory in process, March 31 4200 4200 3360 Total units to be assigned costs 102600 97200 98160 Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for March in Baking Department 136080 58896 Total equivalent units 97200 98160 Cost per equivalent unit 1.4 0.6 Costs charged to production: Direct Materials Conversion Total Inventory in process, March 1 9540 Costs incurred in March 194976 Total costs accounted for by the Baking Department 204516 Cost allocated to completed and partially completed units: Inventory in process, March 1 balance 9540 To complete inventory in process, March 1 0 1080 1080 Cost of completed March 1 work in process 10620 Started and completed in March 130200 55800 186000 Transferred to Packing Department in March 196620 Inventory in process, March 31 5880 2016 7896 Total costs assigned by the Baking Department 204516 a 1. Direct materials cost per equivalent unit = $1.4 2. Conversion cost per equivalent unit = $0.6 3. Cost of the beginning work in process completed during March=$10620 4. Cost of units started and completed during March = 186000 5. Cost of the ending work in process = $7896 2 Conversion cost per equivalent unit increase by $0.05

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