EX 20-14 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 $17,400 of direct materials.


ACCOUNT Work in Process—Forging Department
ACCOUNT NO
Balance
Date Item Debit Credit Debit Credit
Nov. 1
30
30
30
30
30
Bal., 1,200 units, 60% completed
Direct materials, 8,300 units
Direct labor
Factory overhead
Goods transferred, ? units
Bal., 900 units, 70% completed
20,856
145,356
164,306
184,502
ACCOUNT Work in Process—Forging Department
124,500
18,950
20,196
Balance
?
?

a. Determine the number of units transferred to the next department.
b. Determine the costs per equivalent unit of direct materials and conversion.
c. Determine the cost of units started and completed in November.


Answer:

a. 8,600 units (1,200 + 8,300 – 900)
b.
 Whole
Units
Equivalent Units
Direct
Materials Conversion
Inventory in process, November 1
(60% completed) 1,200 0 4801
Started and completed in November 7,4002 7,400 7,400
Transferred to finished goods in 8,600 7,400 7,880
November
Inventory in process, November 30
(70% completed) 900 900 6303
Total units 9,500 8,300 8,510
1 1,200 units × (1 – 60%)
2 8,600 units – 1,200 units
3 900 units × 70%
Costs
Direct
Materials Conversion
Total costs for November in Forging Department $124,500 $39,146*
Total equivalent units (from above) ÷ 8,300 ÷ 8,510
Cost per equivalent unit $ 15.00 $ 4.60
* $18,950 + $20,196
c. $145,040 [7,400 units × ($15.00 + $4.60)]