Question

The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $9,000 of direct materials.

ACCOUNT Work in Process—Forging Department							ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Nov.	1	Bal., 900 units, 60% completed					10,566
	30	Direct materials, 12,900 units	123,840				134,406
	30	Direct labor	21,650				156,056
	30	Factory overhead	16,870				172,926
	30	Goods transferred, ? units			?		?
	30	Bal., 1,400 units, 70% completed					?

Cost per equivalent units of $9.60 for Direct Materials and $3.00 for Conversion Costs.

Based on the above data, determine each of the following amounts.

If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar.

a. Cost of beginning work in process inventory completed in November.
$

b. Cost of units transferred to the next department during November.
$

c. Cost of ending work in process inventory on November 30.
$

d. Costs per equivalent unit of direct materials and conversion included in the November 1 beginning work in process. If required, round your answers to two decimal places.

Direct materials cost per equivalent unit	$
Conversion cost per equivalent unit	$

e. The November increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	$
Change in conversion cost per equivalent unit	Increase	$

Answer 1

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Forging Department
Cost of Production Report-Forging Department
For the Month Ended Nov 31		Equivalent Units
Unit information	Physical Units	Materials	Conversion
Units charged to production:
Inventory in process Nov 1	900.00
Direct materials received	12,900.00
Total units accounted for by the Forging Department	13,800.00
Units to be assigned costs:
Inventory in process Nov 1	900.00	-	360.00	Materials are introduced in the beginning so 100% is already completed for materials. So in this month 0% is completed. So Equivalent units are calculated as 10,800 * 0%. Similarly 60% is already completed for conversion. So in this month 40% is completed. So Equivalent units are calculated as 10,800 * 60%.
Started and completed in Nov	11,500.00	11,500.00	11,500.00	See note B
Goods transferred out in Nov	12,400.00	11,500.00	11,860.00
Inventory in process, Nov 30	1,400.00	1,400.00	980.00	This is closing units multiplied by % of completion
Total units to be assigned costs:	13,800.00	12,900.00	12,840.00
Cost Information				Total
Costs per equivalent unit
Total costs for Nov in Forging Department		123,840.00	38,520.00
Total equivalent units		12,900.00	12,840.00
Cost per equivalent unit		9.60	3.00
Costs assigned to production:
Inventory in process, Nov 1		9,000.00	1,566.00	10,566.00
Costs incurred in Nov		123,840.00	38,520.00	162,360.00
Total costs accounted for by the Forging Department				172,926.00
Costs allocated to completed and partially completed units
Inventory in process, Nov 1 balance		9,000.00	1,566.00	10,566.00
To complete inventory in process, Nov 1		-	1,080.00	1,080.00	Answer a
Cost of completed Nov 1 work in process		9,000.00	2,646.00	11,646.00
Started and completed in Nov		110,400.00	34,500.00	144,900.00
Transferred to next Department in Nov				156,546.00	Answer b
Inventory in process, Nov 30		13,440.00	2,940.00	16,380.00
Total costs assigned by the Forging Department				172,926.00	Answer c

Goods transferred out in Nov
Opening work in process	900.00
Add: Materials received	12,900.00
Less: Closing work in process	1,400.00
Goods transferred out in Nov	12,400.00
Started and completed in Nov	Note B
Goods transferred out in Nov	12,400.00
Less: Opening work in process	900.00
Started and completed in Nov	11,500.00

Answer d
Calculation of beginning Costs per equivalent unit	Physical Units	Materials	Conversion
Inventory in process Nov 1	900.00	900.00	540.00
Costs		9,000.00	1,566.00
Beginning Costs per equivalent unit		10.00	2.90

Answer e		Materials
Beginning Costs per equivalent unit		10.00
Costs per equivalent unit for Nov		9.60
Decrease by		(0.40)
Answer e		Conversion
Beginning Costs per equivalent unit		2.90
Costs per equivalent unit for Nov		3.00
Increase by		0.10