Hot Cakes Co. manufactures dry pancake mix, and their accountant Tom has collected the following cost information for the current year:
Beginning Work-in-Progress (WIP) Inventory:
Pancake Mix, $425
Conversion Costs, $877
Costs added during this year:
Pancake Mix, $18,994
Conversion Costs, $21,805
In addition to the aforementioned data, Tom has gathered the following production information for the year:
Tom has collected the following cost information for last year:
Beginning WIP Inventory:
Pancake Mix, $399
Conversion Costs, $654
Costs added during last year:
Pancake Mix, $14,673
Conversion Costs, $17,662
Tom has also gathered the following production information for last year:
Hot Cakes uses the Weighted-Average method for its Process Costing. Please use the information above to answer the following questions:
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for the current year?
b. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for last year?
c. What is the increase or decrease for Direct Materials between last year and the current year? What is the increase or decrease in Conversion Costs between last year and the current year? If Hot Cakes would like to switch to the First-In, First-Out (FIFO) method, then would this be an acceptable transition?

Question

Hot Cakes Co. manufactures dry pancake mix, and their accountant Tom has collected the following cost information for the current year: 
Beginning Work-in-Progress (WIP) Inventory:
Pancake Mix, $425
Conversion Costs, $877
Costs added during this year:
Pancake Mix, $18,994
Conversion Costs, $21,805
In addition to the aforementioned data, Tom has gathered the following production information for the year:
  Tom has collected the following cost information for last year:
Beginning WIP Inventory:
Pancake Mix, $399
Conversion Costs, $654
Costs added during last year:
Pancake Mix, $14,673
Conversion Costs, $17,662
Tom has also gathered the following production information for last year:
  Hot Cakes uses the Weighted-Average method for its Process Costing. Please use the information above to answer the following questions:
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for the current year?
b. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for last year?
c. What is the increase or decrease for Direct Materials between last year and the current year? What is the increase or decrease in Conversion Costs between last year and the current year? If Hot Cakes would like to switch to the First-In, First-Out (FIFO) method, then would this be an acceptable transition?

Quizplus · Accepted Answer

The Answer of Hot Cakes Co. manufactures dry pancake mix, and their accountant Tom has collected the following cost information for the current year: 
Beginning Work-in-Progress (WIP) Inventory:
Pancake Mix, $425
Conversion Costs, $877
Costs added during this year:
Pancake Mix, $18,994
Conversion Costs, $21,805
In addition to the aforementioned data, Tom has gathered the following production information for the year:
  Tom has collected the following cost information for last year:
Beginning WIP Inventory:
Pancake Mix, $399
Conversion Costs, $654
Costs added during last year:
Pancake Mix, $14,673
Conversion Costs, $17,662
Tom has also gathered the following production information for last year:
  Hot Cakes uses the Weighted-Average method for its Process Costing. Please use the information above to answer the following questions:
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for the current year?
b. What is the equivalent cost per unit for Direct Materials and Conversion Costs, respectively for last year?
c. What is the increase or decrease for Direct Materials between last year and the current year? What is the increase or decrease in Conversion Costs between last year and the current year? If Hot Cakes would like to switch to the First-In, First-Out (FIFO) method, then would this be an acceptable transition?