Question

Weather Instruments assembles products from component parts. It has two departments that process all products. During January the beginning work-in-process in the assembly department was half completed as to conversion and complete as to direct materials. The beginning inventory included $12,000 for materials and $4,000 for conversion costs. Overhead is applied at the rate of 50 percent of direct manufacturing labour costs. Ending work-in-process inventory in the assembly department was 40 percent complete. All spoilage is considered normal and is detected at the end of the process. Additional information about the two departments follows:

                                                        Assembly        Finishing

Beginning work-in-process units         20,000            24,000

Units started this period                       40,000                      ?

Units transferred this period                50,000            54,000

Ending work-in-process units                8,000            20,000

Material costs added                          $44,000          $28,000

Direct manufacturing labour             $16,000          $24,000

Required:

Calculate the following for the assembly department assuming that spoilage is recognized, and the weighted-average method is used.

a) Equivalent units of production.

b) Cost per Equivalent unit of production.

c) Cost of Ending Inventory.

d) Cost of units transferred out.

e) Cost of Abnormal Spoilage.

Answer 1

Assembly Department
Production Cost Report
For the month ending…
a)Input/Output Reconciliation(Summery of Quantity schedule)
Units be accounted for	Units
Units in beginning WIP Inventory	20,000
Units started/transferred in during the period	40,000
Total units be accounted for	60,000
Units transferred out	50,000
Units in ending WIP Inventory	8,000
Units Loss in process (Normal Loss)	2,000
Total units accounted for	60,000	-
b) Equivalent units calculations- Weighted Avg Method
	Material	Conversion Cost
Transferred out (A)	50,000.00	50,000.00
Units of ending WIP (B)	8,000.00	8,000.00
Percentage of completion of ending WIP (C)	40%	40%
Equivalent units in ending WIP (D=BXC)	3,200.00	3,200.00
Total equivalent units (A+D)	53,200.00	53,200.00
c) Calculation of Cost per Equivalent Unit
	Material	Conversion Cost	Total
Cost in beginning WIP Inventory (A)	$               12,000.00	$             4,000.00	$      16,000.00
Cost added during the period (B)	$               44,000.00	$           16,000.00	$      60,000.00
Cost be accounted for(C=A+B)	$               56,000.00	$           20,000.00	$      76,000.00
Total Equivalent unit be accounted for (D)	53,200.00	53,200.00
Cost per Equivalent Unit (E=C/D)	1.05	0.38	1.43
d) & e) Assignment of Cost the Units transferred out & Units in ending WIP
	Material	Conversion Cost	Total
Cost assigned the units transferred out (D)= {Cost per Equivalent unit* Equivalent unit}	$                     52,632	$                 18,797	$            71,429
	(50000*1.05)	(50000*0.38)
Cost assigned the ending WIP Inventory (E)= {Cost per Equivalent unit* Equivalent unit}	$                       3,368	$                   1,203	$              4,571
	(3200*1.05)	(3200*0.38)
Total Cost accounted for			$      76,000.00
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