Costs in the beginning inventory:
Units started into production during the month
Units completed and transferred out
Costs added to production during the month
Work in process, ending:
Units in process
Percent complete with respect to materials
Percent complete with respect to conversion
Required (10 points)
a. Determine the equivalent units of production
b. Determine the cost per equivalent unit
c. Determine the cost of ending work in process inventory.
d. Determine the cost of units transferred to the next department
Management believes three activities cause overhead costs. The cost drivers and related
costs are as follows:
Number of Production Runs
Quality Tests Performed
Shipping Orders Processed
Required (20 point)
a. How much of the overhead will be assigned to each product if the three cost drivers are
used to allocate overhead? What would be the cost per unit produced for each product?
b. How much of the overhead would have been assigned to each product if direct labor
cost had been used to allocate overhead? What would have been the total cost per unit
produced for each product?
c. How might the results explain why profits did not increase as much as management
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