Question

1.     In the case above, how would the cost per unit be different if beginning WIP inventory for the month was only 50% complete, instead of 70%?

2.     NOW ASSUME that there was no BEGINNING WIP at the start of August; that is, assume that all 80,000 of the units worked on were started in August, (including the 10,000 of BWIP). This means all costs shown above, including the $13,500 - were also incurred in the current period – August. Repeat requirement 1 using this assumption.

a)     What was the new cost per unit?

b)    Why was this different?

c)     Is this an okay assumption to make? Explain why or why not.

Delaware company

In the Processing Department (the first department), they began the month of August with 10,000 units in process which were 70 percent complete as to conversion (labor and overhead). It started 70,000 units into production during the month of August of which 20,000 remained in ending Work in Process inventory which were 40 percent complete as to conversion costs. The cost data for the Production Department is as follows:

BWIP		$10,000	$3,500	$13,500
CURRENT ADDED		126,000	30,500	156,500
TOTAL COSTS		$136,000	$34,000	$170,000

Answer 1