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Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost...

Timekeeper Inc. manufactures clocks on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Timekeeper Inc. uses weighted-average costing.

Data for the Assembly Department for June are:

      Work in process, beginning inventory                            300 units

            Direct materials (100% complete)

            Conversion costs (50% complete)

      Units started during June                                               950 units

      Work in process, ending inventory:                                150 units

            Direct materials (100% complete)

            Conversion costs (75% complete)

Costs for June:

      Work in process, beginning inventory:

            Direct materials                                                          $90,000

            Conversion costs                                                     $135,000

      Direct materials costs added during June                     $600,000

      Conversion costs added during June                            $400,000

What amount of direct materials costs is assigned to the ending Work-in-Process account for June?

A.

$82,800
B.

$62,100
C.

$37,240
D.

$30,454

Solutions

Expert Solution

Solution:

Computation of Equivalent unit of Production - Weighted Average - Timekeeper Inc.
Flow of Production Flow of physical units Material Conversion
Units Accounted for:
Unit completed & Transferred out 1100 1100 1100
Ending WIP: 150
Material (100%) 150
Conversion (75%) 112.5
Equivalent units of production 1250 1250 1212.5
Computation of Cost per equivalent unit of Production - Weighted Average - Time Keeper Inc.
Particulars Material Conversion
Opening WIP $90,000.00 $135,000.00
Cost Added during period $600,000.00 $400,000.00
Total cost to be accounted for $690,000.00 $535,000.00
Equivalent units of production 1250 1212.5
Cost per Equivalent unit $552.00 $441.24

Amount of direct materials costs is assigned to the ending Work-in-Process account for June = Equivalent units of material in ending inventory * Cost per equivalent unit = 150 * $552 = $82,800

Hence option A is correct.

ekkarill92 answered 2 years ago
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