Question

Apeto Company produces premium chocolate candy bars. Conversion costs are added uniformly. For February, EWIP is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the process. The following information is provided for February: Physical flow schedule: Units to account for: Units in BWIP 0 Units started 70,000 Total units to account for 70,000 Units accounted for: Units completed: From BWIP 0 Started and completed 47,000 47,000 Units in EWIP 23,000 Total units accounted for 70,000 Inputs Direct Materials Conversion Costs $38,500 $61,820 Required: 1. Calculate the equivalent units for each input category. Equivalent Units Direct Materials Conversion 2. Calculate the unit cost for each category and in total. If required, round your answers to the nearest cent. Unit direct materials cost $ Unit conversion cost $ Total unit cost $ 3. What if a different type of materials is also added at the end of the process (a candy wrapper), costing $4,700

Answer 1

Equivalent units for direct materials are 70,000 and for conversion costs are 56,200. The unit cost for direct materials is $0.55, for conversion costs is $1.10, and the total unit cost is $1.65. If candy wrappers are added at a cost of $4,700, the new total unit cost becomes $1.72 per unit.

Step-by-step explanation:

Calculating Equivalent Units and Costs in Production Process

To calculate the equivalent units for each input category, we consider that materials are added at the beginning of the process and thus all units will have 100% of the material costs applied.

For conversion costs, the equivalent units are the units completed plus the equivalent units for the ending work in process (EWIP), calculated as 40% of the 23,000 units in EWIP:

Conversion Costs: 47,000 units (completed) + 9,200 units (40% of 23,000 EWIP) = 56,200 equivalent units

For direct materials: $38,500 / 70,000 units = $0.55 per unit.

For conversion costs: $61,820 / 56,200 units = $1.10 per unit.

The total unit cost is the sum of the unit direct materials cost and the unit conversion cost, equaling $1.65 per unit.

If a different type of material (candy wrapper) was added at the end of the process, costing an additional $4,700, this cost would be divided by the total number of units to find the additional cost per unit. Therefore, the additional unit cost for candy wrappers would be $4,700 / 70,000 units = $0.07 per unit, making the new total unit cost $1.65 + $0.07 = $1.72 per unit.

Answer 2

1. Equivalent units

Direct materials = 70,000 units

Conversion Units = 47,000 + 23,000*40% = 47,000 + 9,200 = 56,200 units

2. Unit direct material cost = $38,500 / 70,000 = $0.55

Unit conversion cost = $61,820 / 56,200 = $1.10

Total unit cost = $0.55 + $1.10 = $1.65

3. New unit cost = $1.65 + ($4,700/47,000 units) = $1.65 + $0.1 = $1.75