Question

Nonuniform Inputs Apeto Company produces premium chocolate candy bars. Conversion costs are added uniformly. For February, EWIP is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the process. The following information is provided for February: Physical flow schedule: Units to account for: Units in BWIP 0 Units started 70,000 Total units to account for 70,000 Units accounted for: Units completed: From BWIP 0 Started and completed 45,000 45,000 Units in EWIP 25,000 Total units accounted for 70,000 Inputs Direct Materials Conversion Costs $31,500 $71,500

What if a different type of materials is also added at the end of the process (a candy wrapper), costing $4,500? Calculate the new unit cost. If required, round your answer to the nearest cent.

Answer 1

Equivalent units of production = units started and completed + (units in ending inventory x accomplishment %) Equivalent units of production = 45000+(25000*0%) Equivalent units of production = 45,000 units Zero for ending work in process inventory is because that they are still incomplete and it is stated in the question that this type of material is only added at the end of the process. Unit cost = Total material cost of newly added / equivalent units of production Unit cost = (4500/45000) Unit cost = $ 0.10/. New per unit cost = Old per unit cost + Unit cost for materials added New per unit cost = (1.75-0.10) New per unit cost = $ 1.85/. Old cost per unit is = Per unit cost for direct materials + Per unit cost for conversion cost Unit cost for direct materials - total direct materials cost / equivalent units of production for direct materials Equivalent units for direct materials = units started and completed + units in ending inventory Equivalent units for direct materials = 45,000 + (25,000x100%) Equivalent units for direct materials - 45000+25000 Equivalent units for direct materials = 70,000/ Total direct materials cost = $ 31,500/ Per unit cost of dire materials is = (31500/70000) Per unit cost of dire materials is = $ 0.45/. Equivalent units for conversion costs = units started and completed + units in ending inventory Equivalent units for Conversion costs = 45,000 + (25,000x40%) Equivalent units for Conversion costs - 45000-10000 Equivalent units for Conversion costs = 55,000/. Total Conversion costs cost = $ 71,500/. Per unit cost of Conversion costs is = (71500/55000) Per unit cost of Conversion costs is = $ 1.307. Old cost per unit is = Per unit cost for direct materials + Per unit cost for conversion cost Old cost per unit is = 0.45+1.30 Old cost per unit is = $ 1.75/.