Question

Cost per Equivalent Unit

The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $109,200 of direct materials.

ACCOUNT Work in Process—Forging Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Nov.	1	Bal., 8,400 units, 40% completed					118,608
	30	Direct materials, 76,000 units	965,200				1,083,808
	30	Direct labor	97,070				1,180,878
	30	Factory overhead	134,060		?		1,314,938
	30	Goods finished, ? units					?
	30	Bal., 6,700 units, 80% completed					?

a. Determine the number of units transferred to the next department.
units

b. Determine the costs per equivalent unit of direct materials and conversion. If required, round your answer to two decimal places.

Cost per equivalent unit of direct materials	$
Cost per equivalent unit of conversion	$

c. Determine the cost of units started and completed in November.
$

Answer 1

Requirement 1

Units transferred = 77,700

Requirement 2

Cost per equivalent unit of direct materials	$ 12.70
Cost per equivalent unit of conversion	$2.90

Requirement 3

Cost of unit started and completed= $133,224

Working

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion cost	Material	Conversion cost
Beginning WIP	8,400	100%	40%	0%	60%
Units introduced	76,000
Total units to be accounted for	84,400
Completed and Transferred unit	77,700	0%	0%	100%	100%
Ending WIP	6,700	0%	0%	100%	80%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion cost
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	8,400	0%	-	60%	5,040
From units started/Introduced	69,300	100%	69,300	100%	69,300
Total	77,700		69,300		74,340
	Total Units	Material		Conversion cost
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	6,700	100%	6,700	80%	5,360
Total EUP	84,400		76,000		79,700

.

STEP 3
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion cost		TOTAL
Cost incurred in Current Period	$ 965,200		$ 231,130		$ 1,196,330
Total Equivalent Units	76,000		79,700
Cost per Equivalent Units	$ 12.70		$ 2.90		$                      15.60
Cost of Beginning WIP					$ 118,608
Total cost to be accounted for					$ 1,314,938

.

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		77,700.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	-	$ 12.70	$ 0
	Conversion cost	5,040	$ 2.90	$ 14,616	$ 14,616
B	Cost of Beginning WIP				$ 118,608
C=A+B	Total cost of units started and completed				$ 133,224