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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Costs per equivalent unit

Georgia Products Inc. completed and transferred 89,000 particle hoard units of production from the Pressing Department. There was no beginning inventory in process in the department. The ending in-process inventory was 2,400 units, which were 3/5 complete as to conversion cost. All materials are added at the beginning of the process. Direct materials cost incurred was $219,360, direct labor cost incurred was $28,100, and factory overhead applied was $12,598.

Determine the following for the Pressing Department:

a. Total conversion cost

b. Conversion cost per equivalent unit

c. Direct materials cost per equivalent unit

(a)

To determine

Process costs

It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

Cost per unit

Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost.

To Determine: The total conversion cost for Incorporation GP.

Explanation

Calculate total conversion cost for Incorporation GP as shown below:

Total conversion cost =Direct labor cost +Factory overhead applied=

(b)

To determine
The conversion cost per equivalent unit for Incorporation GP.

(c)

To determine
The direct material cost per unit for Incorporation GP.

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