In: Accounting
General Fabricators assembles its product in two departments. It has two departments that process all units: Cutting and Finishing. During October, Cutting department allocated a total cost of $75,000 to units that were finished in the cutting process and transferred to the finishing process.
In October, beginning work in process in the finishing department was 75% complete as to conversion. Direct materials are added at the end of the finishing process. Conversion costs are added evenly in the finishing process. Beginning inventories in finishing department included $9,000 for transferred-in costs and $20,000 for conversion costs. Ending inventory in finishing department was 30% complete. Additional information about the departments in October follows:
Finishing |
|
Beginning WIP units |
20,000 |
Units started this period |
50,000 |
Units transferred this period |
50,000 |
Ending WIP units |
20,000 |
Materials costs added |
$28,000 |
Direct Manufacturing Labor added |
$40,000 |
Other Conversion costs added |
$24,000 |
Required:
1. Determine a) the amount of ending WIP, b) the amount of transferred- out cost (credit amount), usingWeighted Averagefor the finishing department.
Cost of ending inventory= $33,000
Cost of goods transferred= $163,000
Working
Statement of Equivalent Units | |||||||
Transferred in | Material | Conversion | |||||
Units | Complete % | Equivalent units | Complete % | Equivalent units | Complete % | Equivalent units | |
Transferred | 50,000 | 100% | 50,000 | 100% | 50,000 | 100% | 50,000 |
Closing WIP | 20,000 | 100% | 20,000 | 0% | - | 30% | 6,000 |
Total | 70,000 | Total | 70,000 | Total | 50,000 | Total | 56,000 |
Cost per Equivalent Units | ||||
COST | Transferred in | Material | Conversion | TOTAL |
Beginning WIP Inventory Cost | $ 9,000 | $ 0 | $ 20,000 | $ 29,000 |
Cost incurred during period | $ 75,000 | $ 28,000 | $ 64,000 | $ 167,000 |
Total Cost to be accounted for | $ 84,000 | $ 28,000 | $ 84,000 | $ 196,000 |
Total Equivalent Units | 70,000 | 50,000 | 56,000 | |
Cost per Equivalent Units | $ 1.20 | $ 0.56 | $ 1.50 | $ 3.26 |
Statement of cost | |||||
Equivalent Cost/unit | Ending WIP | Transferred | |||
Units | Cost Allocated | Units | Cost Allocated | ||
Transferred in | $ 1.20 | 20,000 | $ 24,000 | 50,000 | $ 60,000 |
Material | $ 0.56 | - | $ 0 | 50,000 | $ 28,000 |
Conversion | $ 1.50 | 6,000 | $ 9,000 | 50,000 | $ 75,000 |
TOTAL | $ 196,000 | TOTAL | $ 33,000 | TOTAL | $ 163,000 |