The balance in begining work in process at Bing Rubber Company for direct labor

Question

The balance in begining work in process at Bing Rubber Company for direct labor was 143,000. During the month of March and additional 1,072,000 of direct labor was incurred, and 38,400 pounds of Rubber was produced. At the end of March 13,200 lbs of rubber was in process and the units were 50% complete. At the start of March the company had 6,050 lbs of rubber that was 40% complete.



Calculate the cost per equivalant unit for assuming that labor is added unformally throughout the production process?

Explanation / Answer

OK, we are going to assume that the balance of $143,000 was related to rubber production. We further assume that the 6,050 lbs of rubber at the start of March is included in the 38,400 lbs. This partially complete 6,050 lbs was made with the $143,000 labor. We further assume cost in $ and equivalents in lbs. So cost per equivalent is lbs produced divided by labor costs incurred. The 50% complete rubber counts as half of 13,200lb or 6,600 lb. cost per equivalent = (143,000 + 1,072,000)$/(38,400+6,600)lb = 27$/lb

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