Question
In: Accounting
Work-in-process inventory, June 1 5,000 alternators Direct materials: 100% complete $ 11,480 Conversion: 40% complete $...
| Work-in-process inventory, June 1 | 5,000 | alternators | |||||||||
| Direct materials: 100% complete | $ | 11,480 | |||||||||
| Conversion: 40% complete | $ | 16,258 | |||||||||
| Units started during June | 19,000 | trusses | |||||||||
| Units completed during June and transferred out | 18,000 | trusses | |||||||||
| Work-in-process inventory, June 30 | |||||||||||
| Direct materials: 100% complete | |||||||||||
| Conversion: 20% complete | |||||||||||
| Costs incurred during June | |||||||||||
| Direct materials | $ | 60,040 | |||||||||
| Conversion | $ | 93,092 | |||||||||
Required
Using the weighted-average method, calculate the following:
1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.)
1-b. Cost of goods completed and transferred out. (Round "Cost per EU" to 4 decimal places. Round final answer to nearest whole dollars.)
1-c. Costs remaining in the Work-in-Process Inventory account. (Round "Cost per EU" to 4 decimal places. Do not round other intermediate calculations. Round final answer to nearest whole dollars.)
2. Assume that you are the company’s controller. The production department’s June equivalent unit cost is higher than expected. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 20 to 40% to lower the unit costs, how much would unit cost be affected by this request? (Round your answer to 4 decimal places.)
Solutions
Expert Solution
|
Requirement [1a] |
|||||
|
Material |
Conversion |
||||
|
Cost per Equivalent units |
2.98 |
5.6953 |
|||
|
--Working |
|||||
|
EUP - Weighted Average Method |
Units |
% Material |
EUP Materials |
% Conversion |
EUP - Conversion |
|
Units TRANSFERRED |
18,000 |
100% |
18,000 |
100% |
18,000 |
|
Units of ENDING WIP |
6,000 |
100% |
6,000 |
20% |
1,200 |
|
Equivalent Units of Production |
24,000 |
19,200 |
|||
|
COST per EUP |
Material |
Conversion |
|||
|
Cost of Beginning WIP |
11480 |
16258 |
|||
|
Cost incurred during the period |
60040 |
93092 |
|||
|
Total Costs |
Costs |
71520 |
Costs |
109350 |
|
|
Equivalent units of production |
EUP |
24,000 |
EUP |
19,200 |
|
|
Cost per EUP |
2.98 |
5.6953 |
|||
|
Requirement [1b] = |
24714 |
||||
|
Cost of Units Transferred Out |
EUP |
Cost per EUP |
Total Cost |
||
|
- Direct Materials |
18,000 |
2.98 |
53640 |
||
|
- Conversion |
18,000 |
5.6953 |
102516 |
||
|
Total Cost transferred Out |
156156 |
||||
|
Requirement [1c] = |
$ 22,071 |
||||
|
Cost of ending WIP |
EUP |
Cost per EUP |
Total Cost |
||
|
- Direct Materials |
6,000 |
2.98 |
17880 |
||
|
- Conversion |
1,200 |
5.6953 |
6834 |
||
|
Total cost of ending WIP |
24714 |
||||
|
Requirement 2 |
|||||
|
Weighted average cost per unit at 40% change = |
5.3603 |
||||
|
Weighted average cost per unit earlier = |
5.6953 |
||||
|
Hence, |
|||||
|
Cost per unit DECREASES by |
0.3350 |
||||
|
--Working |
|||||
|
Material |
Conversion |
||||
|
Cost per Equivalent units |
2.98 |
5.3603 |
|||
|
EUP - Weighted Average Method |
Units |
% Material |
EUP Materials |
% Conversion |
EUP - Conversion |
|
Units TRANSFERRED |
18,000 |
100% |
18,000 |
100% |
18,000 |
|
Units of ENDING WIP |
6,000 |
100% |
6,000 |
40% |
2,400 |
|
Equivalent Units of Production |
24,000 |
20,400 |
|||
|
COST per EUP |
Material |
Conversion |
|||
|
Cost of Beginning WIP |
11480 |
16258 |
|||
|
Cost incurred during the period |
60040 |
93092 |
|||
|
Total Costs |
Costs |
71520 |
Costs |
109350 |
|
|
Equivalent units of production |
EUP |
24,000 |
EUP |
20,400 |
|
|
Cost per EUP |
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