Question

MacLean Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two​ departments: the assembly department and the finishing department. This problem focuses on the assembly department. The​ process-costing system at MacLean has a single​ direct-cost category​ (direct materials) and a single​ indirect-cost category​ (conversion costs). Direct materials are added when the assembly department process is​10% complete. Conversion costs are added evenly during the assembly​ department's process. MacLean uses the​ weighted-average method of process costing. Consider the following data for the assembly department in April 2017​:

	Physical Units (frames)	Direct Materials	Conversion Costs
Work in process, April 1^a	120	$ 2,140	$ 2,916
Started during April 2017	485
Completed during April 2017	445
Work in process, April 30^b	160
Total costs added during April 2017		$18,430	$ 9,315

a Degree of​ completion: direct​ materials, 100%; conversion​ costs, 40%.

b Degree of​ completion: direct​ materials, 100​%; conversion​ costs, 55​%

Question:

1.	Summarize total assembly department costs for April 2017​, and assign them to units completed​ (and transferred​ out) and to units in ending work in process.
2.	What issues should a manager focus on when reviewing the equivalent units​calculation?

Answer 1

Compuation of equivalent units
Particulars			Physical unit	Equivalent unit
				Direct material	Conversion cost
Work in process beginning			$                 120.00
started during current period			$                 485.00
total			$                 605.00
completed and transferred			$                 445.00	$         445.00	$              445.00
Work in process ending (160*100%),(160*55%)			$                 160.00	$         160.00	$                88.00
equivalent unit			$                 605.00	$         605.00	$              533.00
Cost to the unit completed and to unit in WIP Inventory
Particulars			total cost	Direct material	Conversion cost
work in process beginning			$             5,056.00	$     2,140.00	$          2,916.00
cost added in current period			$           27,745.00	$   18,430.00	$          9,315.00
total cost to account for (a)			$           32,801.00	$   20,570.00	$        12,231.00
equivalent unit (b)				$         605.00	$              533.00
cost per equivalent unit (a)/(b)				$           34.00	$                22.95
Assignment of cost
completed & transferred out (445*34),(445*22.95)			$           25,342.75	$   15,130.00	$        10,212.75
Work in process ending (160*34), (88*22.95)			$             7,459.60	$     5,440.00	$          2,019.60
when reviewing the equivalent unit calculation manager should focus on % of compleetion
of conversion cost of ending WIP