Old Victrola, Inc., produces top-quality stereos and uses process costing. The m

Question

Old Victrola, Inc., produces top-quality stereos and uses process costing. The manufacture of stereos is such that direct materials, labor, and overhead are all added evenly throughout the production process. Due to the smooth production process, only one cost category—manufacturing costs—is used for equivalent unit calculations. Old Victrola had the following cost and production information available for the months of March and April.

Beginning work in process was 30 percent complete in March and 60 percent complete in April. Ending work in process was 60 percent complete in March and 35 percent complete in April.

a. For each of the two months, calculate the equivalent units of production.

b-1. For each of the two months, calculate the manufacturing cost per equivalent unit.

b-2. Based on equivalent units produced, did total manufacturing costs per unit increase or decrease between March and April?

c-1. For each of the two months, calculate the direct materials cost per equivalent unit.

c-2.Did the direct materials cost per equivalent unit increase or decrease between March and April?

March April Direct materials costs $ 978,460 $ 1,168,310 Direct labor costs 2,562,260 3,041,940 Manufacturing overhead applied 3,438,640 3,571,030 Total manufacturing costs $ 6,979,360 $ 7,781,280 Units in beginning work in process 7,600 5,000 Units transferred to finished goods 17,100 35,500 Units in ending work in process 5,000 6,400

Explanation / Answer

MARCH MONTH UNITS TO ACCOUNT FOR: Beginning Work in Process units 7,600 Add: Units Started in Process 14,500 Total Units to account for: 22,100 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 7600 Units started and completed 9,500 Ending Work in Process 5,000 Total Units to be accounted for: 22,100 Equivalent Units: Material Cost Conversion Manufacturing cost % Completion Units % Completion Units Units Units completed from Beg. WIP 70% 5,320 70% 5,320 5320 Units started and completed 100% 9,500 100% 9,500 9500 Ending Work in Process 60% 3,000 60% 3,000 3000 Total Equivalent units 17,820 17,820 17820 COST PER EQUIVALENT UNIT: Material Conversion Manufacturing Cost Total cost added during the year 978,460 6,000,900 6,979,360 Equivalent Units 17,820 17,820 17820 Cost per Equivalent unit 54.90797 336.7508 391.6588 April Month UNITS TO ACCOUNT FOR: Beginning Work in Process units 5,000 Add: Units Started in Process 36,900 Total Units to account for: 41,900 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 5000 Units started and completed 30,500 Ending Work in Process 6,400 Total Units to be accounted for: 41,900 Equivalent Units: Material Cost Conversion Manufacturing cost % Completion Units % Completion Units Units Units completed from Beg. WIP 40% 2,000 40% 2,000 2000 Units started and completed 100% 30,500 100% 30,500 30500 Ending Work in Process 35% 2,240 35% 2,240 2240 Total Equivalent units 34,740 34,740 34740 COST PER EQUIVALENT UNIT: Material Conversion Manufacturing Cost Total cost added during the year 1,168,310 6,612,970 7,781,280 Equivalent Units 34,740 34,740 34740 Cost per Equivalent unit 33.63011 190.3561 223.9862 Req a; Equivalent units: March month: 17820 units Aapril month: 34740 units Rreq b: Mannufacturing cost per unit: March: $ 391.66 April: $ 223.99 Req b-2 Manufacturing cost decrease between march to April. Req c-1 Direct material cost per unit: March: $ 54.91 April :   $ 33.63 Req C-2 Material cost has been decrease between march and april.

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