The following information concerns production in the Baking

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

1.    Determine the number of units in work in process inventory at the end of the month.

2.   Determine the equivalent units of production for direct materials and conversion costs in August.

Answer

Check Figure: Conversion, 201,800

3. Determine the following:

Direct materials cost per equivalent unit.

B.    Conversion cost per equivalent unit.

C.    Cost of the beginning work in process completed during August.

D.   Cost of units started and completed during August.

E.    Cost of the ending work in process.

Answer

Check Figure: 2. Conversion cost per equivalent unit, $0.32

Assuming that the direct materials cost is the same for July and August, did the conversion cost per equivalent unit increase, decrease, or remain the same in August?

Solution

Cost of Production Report-Baking Department For the Month Ended August 31 Unit Information Units charged to production: Inventory in process, August 1 5000 Received from materials storeroom 204000 Total units accounted for by the Baking Department 209000 Units to be assigned costs: Equivalent Units Whole Units Direct Materials Conversion Inventory in process, August 1 5000 0 3000 Started and completed in August 191000 191000 191000 Transferred to Packing Department in August 196000 191000 194000 Inventory in process, August 31 13000 13000 7800 Total units to be assigned costs 209000 204000 201800 Cost Information Costs per equivalent unit: Direct Materials Conversion Total costs for August in Baking Department 306000 64576 Total equivalent units 204000 201800 Cost per equivalent unit 1.5 0.32 Costs charged to production: Direct Materials Conversion Total Inventory in process, August 1 8000 Costs incurred in August 370576 Total costs accounted for by the Baking Department 378576 Cost allocated to completed and partially completed units: Inventory in process, August 1 balance 8000 To complete inventory in process, August 1 0 960 960 Cost of completed August 1 work in process 8960 Started and completed in August 286500 61120 347620 Transferred to Packing Department in August 356580 Inventory in process, August 31 19500 2496 21996 Total costs assigned by the Baking Department 378576 Increase or Decrease Amount Change in conversion cost per equivalent unit Increase 0.07 =(8000-(5000*1.5))/2000 From the above production reports, answers are as follows: 1 Number of units in work in process inventory at the end of the month 13000 2 Equivalent units of production for direct materials 204000 Equivalent units of production for conversion costs 201800 3 Direct materials cost per equivalent unit $1.5 B.    Conversion cost per equivalent unit. $0.32 C.    Cost of the beginning work in process completed during August $8960 D.   Cost of units started and completed during August. $347620 E.    Cost of the ending work in process. $21996 4 Increase in conversion cost per equivalent unit by $0.07