EX 20-10 Costs per equivalent unit

Oregon Products Inc. completed and transferred 72,000 particle board units of production from the Pressing Department. There was no beginning inventory in process in the department. The ending in process inventory was 2,900 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 $202,230, direct labor cost incurred was 36,705, and factory overhead applied was $18,600.

Determine the following for the Pressing Department:
a. Total conversion cost
b. Conversion cost per equivalent unit
c. Direct materials cost per equivalent unit


Answer:

a. Direct labor……………………………………………………………………………… $36,705
Factory overhead applied…………………………………………………………… 18,600
Total conversion cost………………………………………………………………… $55,305
b. Equivalent units of production for conversion costs:
Beginning inventory……………………………………………………………… 0
Started and completed…………………………………………………………… 72,000
Ending inventory (3/5 × 2,900 units)………………………………………… 1,740
Total equivalent units for conversion costs………………………………… 73,740
Conversion cost per equivalent unit:
$55,305
73,740
= $0.75 conversion cost per equivalent unit
c. Equivalent units of production for direct materials costs:
Beginning inventory……………………………………………………………… 0
Started and completed…………………………………………………………… 72,000
Ending inventory (all units completed as to direct materials)…………… 2,900
Total equivalent units for direct materials costs…………………………… 74,900
Direct materials cost per equivalent unit:
$202,230
74,900
= $2.70 direct materials cost per equivalent unit