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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Chapter
Section
BuyFindarrow_forward

Accounting

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

Costs per equivalent unit

a. Based on the data in Exercise 20–7, determine the following for March:

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?

(a.1)

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.

To Determine: The direct material cost per unit.

Explanation

Calculate direct material cost per unit as shown below:

Material cost per unit =Totaldirect materials cost Direct materials units=$

(a.2)

To determine
The conversion cost per unit.

(a.3)

To determine

To Identify: The cost of beginning work in process inventory completed during the period march.

(a.4)

To determine

To Identify: The cost of units started and completed during the period of March.

(a.5)

To determine

To Identify: The cost of ending work in process inventory.

(b)

To determine
If the direct material cost is same in the period of February and March, whether the conversion cost per equivalent unit is increase, decrease, or remains constant in the period of March.

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