Question

Use the following information for questions 1 through 6.

Best Linens manufactures towels and other linens. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Data for the Cutting Department for the month of March 2019 follow:

Work-in-process, February 28—50,000 units

100 percent complete for direct materials; 40 percent completed for conversion costs actual costs of direct materials, $70,500; actual costs of conversion, $34,050

Units started during March,              225,000

Units completed during March         200,000

Work-in-process, March 31             75,000 units

100 percent complete for direct materials; 20 percent completed for conversion costs

Direct materials added during March [actual costs] $342,000

Conversion costs added during March [actual costs]          $352,950

1. Assuming Best Linens uses the weighted-average method to account for inventories, what are the equivalent units of work for the month of March for Direct Materials and Conversion Costs?

2. Assuming Best Linens used the weighted-average method to account for inventories, what is the cost per equivalent whole unit produced during March?

3. Assuming Best Linens uses the weighted-average method to account for inventories, what is the assignment of costs to work-in-process at the end of March?

4. If Best Linens uses the First-in, First-out (FIFO) method to account for inventories, what are the equivalent units of work for the month of March for Direct Materials and Conversion Costs?

5. If Best Linens uses the First-in, First-out (FIFO) method to account for inventories, what is the cost per equivalent unit for March for both Direct Materials and Conversion Costs?

6. Assuming Best Linens uses the First-in, First-out (FIFO) method to account for inventories, what is the assignment of costs to units completed and transferred to the Sewing Department during March?

7. In the Sewing Department, additional direct materials are added to the product at the end of production. Without prejudice to your answer for questions 1 through 9, assume that 200,000 units were transferred from the Cutting Department and that the weighted-average method is used. Data for February follow:

Work-in-process, February 28—70,000 units (30 percent complete as to conversion)

Units completed during March—240,000 units

Work-in-process, March 31—30,000 units (80 percent complete as to conversion)

For the Sewing Department, what are the equivalent units of work done in March for Transferred In, Direct Materials, and Conversion Costs?

Apply the following information to your data from question #7:

8. Standard costs for the Cutting Department—Direct materials: $1.50 per unit; Conversion costs $1.75 per unit, what is the standard cost of units transferred from the Cutting Department during March?

9. Using the information from question 8 regarding standard costs, what is the conversion costs variance for the month of March?

10. Provide the journal entry to record inventory costs and direct-material variances for the month of March.

Answer 1

As per policy, only four parts of a question are allowed to answer at a time, so answering first six parts here:

Report of Cutting Department production:
Weighted Average Method:
	Phy units	DM	Conv. Costs	total
Op WIP	50000	50000	50000
Started & Compl.	150000	150000	150000
Transferred out	200000
Cl. WIP	75000	75000	15000
Equivalent units		275000	215000
total costs:
Op WIP		70500	34050
During March		342000	352950
total costs:		412500	387000
Cost per Eq. unit		1.5	1.8
Cost of Transferred out		300000	360000	660000
Cost of Cl. WIP		112500	27000	139500
Report of Cutting Department production:
FIFO METHOD:
	Phy units	DM	Conv. Costs	total
Op WIP	50000	0	20000
Started & Compl.	150000	150000	150000
Transferred out	200000
Cl. WIP	75000	75000	15000
Equivalent units		225000	185000
During March		342000	352950
Cost per Eq. unit		1.52	1.907838
Total cost of Op. WIP:
Open cost		70500	34050	104550
During March		0	38156.76	38156.76
Total cost of Op. WIP:				142706.76
Cost of Started & Compl.		228000	286175.68	514175.68
Cost of Transferred out				656882.43
Cost of Cl. WIP		114000	28617.57	142617.57