Old Victrola, Inc., produces top-quality stereos and uses process costing. The manufacture of ste- reos is such that direct materials, labor, and overhead are all added evenly throughout the pro- duction 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:
|
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 . . . . . . . . . . . . . . . . . . . . . . . .
|
7,000
|
|
4,800
|
|
Units transferred to finished goods . . . . . . . . . . . . . . . . . . . . . . . .
|
18,500
|
|
23,000
|
|
Units in ending work in process . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
4,800
|
|
6,400
|
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. Based on equivalent units produced, did total manufacturing costs per unit increase or decrease between March and April?
c. Did the direct materials cost per equivalent unit increase or decrease between March and April?