The following information concerns production in the Baking

The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production ACCOUNT Work in Process-Baking Department ACCOUNT NO Balance Date Item Debit Credit Debit Credit 1 Bal., 5,400 units, 4/5 completed 31 Direct materials, 97,200 units 31 Direct labor 31 Factory overhead 31 Goods finished, 98,400 units 31 Bal.? units, 2/5 completed 9,396 135,756 172,526 193,212 6,468 6,468 Mar. 126,360 36,770 20,686 186,744 a. Based on the above data, determine each cost listed below. Round \"cost per equivalent unit\" answers to the nearest cent. 1. Direct materials cost per equivalent unit. 2. Conversion cost per equivalent unit. 3. Cost of the beginning work in process completed during March 4. Cost of units started and completed during March 5. Cost of the ending work in process 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?

Solution

Answer 1. Cost of Production Report - Baking Department For the Month ended Mar 31 Particulars Equivalent Units Physical Units Materials Conversion Costs Units to be accounted for Work in process - Beginning                                       5,400 Started into production                                     97,200 Total units                                   102,600 Units accounted for Goods Units Completed & transferred out: From Beginning WIP                                       5,400                                        -                           1,080 (0% materials, 20% conversion costs) Started & Completed (98,400 - 5,400)                                     93,000                               93,000                       93,000 Work in process, Ending (102,600 - 98,400)                                       4,200                                 4,200                         1,680 (100% materials, 40% conversion costs) Equivalent units accounted for                                   102,600                               97,200                       95,760 Materials Conversion Costs Total Total Cost to Account for: WIP, Beginning                         9,396 Cost added in current period                                   126,360                               57,456                     183,816 Total cost to be account for                                   126,360                               57,456                     193,212 Cost added in current period                                   126,360                               57,456                     183,816 Equivalent Units of work done in current Period                                     97,200                               95,760 Cost per Equivalent Unit                                          1.30                                   0.60                            1.90 Assignment of Costs: Goods Units and Completed out (98,400 Units) WIP, Beginning -5,400 Units                                              -                                          -                           9,396 Cost added to Beg. WIP in Current period                                              -                                       648                             648 (1,080 Units X $0.60) Total of Beginning Inventory                                              -                                       648                       10,044 Started and completed - 93,000 Units                                   120,900                               55,800                     176,700 (93,000 units X $1.30) (93,000 units X $0.60) Total Cost of good units completed & transferred out                                   120,900                               56,448                     186,744 WIP, Ending - 4,200 Units                                       5,460                                 1,008                         6,468 (4,200 units X $1.30) (4,200 units X $0.60) Total Cost accounted For                                   126,360                               57,456                     193,212 Answer a-1 Direct Material Cost per equivalent Unit                                          1.30 Answer a-2. Conversion Cost per equivalent Unit                                          0.60 Answer a-3. Cost of beginning WIP completed during March                                     10,044 Answer a-4. Cost of units started and completed during March                                   176,700 Answer a-5. Cost of Ending WIP                                       6,468 Answer 2. Calculation of Cost per Unit - Oct 1 Materials Conversion Costs Total WIP - Mar 1, Cost                                       7,020                                 2,376                         9,396 Equivalent No. of Unit - WIP - Oct 1                                       5,400                                 4,320 Cost pet Equivalent Unit                                          1.30                                   0.55                            1.85 Materials Conversion Costs Total Cost per Equivalent Unit - Beginning Inventory                                          1.30                                   0.55                            1.85 Cost per Equivalent Unit -Mar                                          1.30                                   0.60                            1.90 Increase (Decrease) in Cost per Unit                                              -                                     0.05                            0.05