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Badgersize Company has the following information for its Forming Department for the month of August.
Work in Process Inventory, August 1: 20,000 units
Direct materials: 100% complete $ 80,000
Conversion: 20% complete 24,000
Balance in work in process, August 1 $ 104,000
Units started during August 49,000
Units completed and transferred in August 60,000
Work in process (70% complete), August 31 ?
Costs charged to Work in Process in AugustDirect materials $140,000Conversion costs:Direct labor $105,000Overhead applied 148,000Total conversion $253,000Assume materials are added at the start of processing.Required:1. Calculate the equivalent units for the Forming Department for the month of August.2. Find the cost per equivalent of input resource.

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jepessoa

Answer:

1. Calculate the equivalent units for the Forming Department for the month of August.

  • direct materials 60,000 units
  • conversion 70,000 units

2. Find the cost per equivalent of input resource.

  • direct materials per unit $2.33
  • conversion cost per unit $3.61

Explanation:

beginning WIP 20,000 units:

direct materials 100% = 20,000 equivalent units $80,000

conversion 20% = 4,000 equivalent units $24,000

total $104,000

Units completed and transferred 60,000

Ending WIP = 20,000:

direct materials 100%

conversion costs 70% = 14,000 equivalent units

costs charged:

Direct materials $140,000

Direct labor $105,000

Overhead applied 148,000

equivalent units:

direct materials 60,000 since all materials are added at the beginning

conversion = units started + ending WIP - beginning WIP = 60,000 + 14,000 - 4,000 = 70,000 units

direct materials per unit = total direct materials / equivalent units = $140,000 / 60,000 = $2.33

conversion costs per unit = total conversion costs / equivalent units = $253,000 / 70,000 = $3.61

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