Pacific Products Inc. completed and transferred 55,000 particle board units of p

Question

Pacific Products Inc. completed and transferred 55,000 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 1,400 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 $203,040, direct labor cost incurred was $38,900, and factory overhead applied was $28,108

Determine the following:
a. Total conversion cost
b. Conversion cost per equivalent unit: Enter your answer to two decimal places.
c. Direct materials cost per equivalent unit: Enter your answer to two decimals places.

Explanation / Answer

(a) Total Conversion Cost = Direct labour cost + Factory overhead = 38900 + 28108 = $67,008 (b)Assume there is no loss, finished good inventory = 55000 - 1400 = 53,600 units Total equivalent units for conversion costs = (53600 x 100% + 1400 x 60% = 54,440 units Conversion cost per equivalent unit = 67008/54440 = $1.23 (c) Equivalent units for material costs = 55000 units Direct material cost per equivalent units = 203040/55000 = $3.69 Hope this helps

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