Data:

Water Gear
Shaping Department
Month Ended May 31
	Flow of	Equivalent Units
	Physical	Direct	Conversion
Flow of Production	Units	Materials	Costs
Units to account for:
Beginning work in process, May 1	0
Started in production during May	66,000
Total physical units to account for	66,000
Units accounted for:
Completed and transferred out during May	50,000	50,000	50,000
Ending work in process, May 31	16,000	16,000	4,800 *
Total physical units accounted for	66,000
Total equivalent units		66,000	54,800
*16,000 units each 30% complete = 4,800 equivalent units

Water Gear
Shaping Department
Month Ended May 31
	Direct	Conversion
	Materials	Costs		Total
Beginning work in process, May 1	$0	$0		$0
Costs added during May:	135,000	65,250	*	200,250
Total costs to account for	$135,000	$65,250		$200,250
*$22,000 of direct labour plus $43,250 of manufacturing overhead = $65,250 of conversion costs

Water GearWater Gear, a sporting goods company, produces swim masks. During May, the Shaping Department determined the following equivalent units and incurs the following costs while working on 66,000.

Suppose direct labour is $52,000 rather than $22,000. Now what is the conversion cost per equivalent unit?

Water Gear
Shaping Department
Conversion Cost per Equivalent Unit
	Conversion
Flow of Production	Costs
Cost to account for

Cost per equivalent unit