Question

The following is partial information for the month of March for Macmillan International Inc., a two-department manufacturer that uses process costing:

Determine assignment of costs.

Work in process, beginning (67% converted)

15,000

units

Costs of beginning work in process:

 Transferred in from department A

$ 9,500

 Materials

0

 Conversion

11,200

Units completed and transferred out during March

45,000

units

Units transferred in during March from department A

?

units

Work in process, ending (37.5% converted)

16,000

units

Materials costs added during March

$13,000

Conversion costs added during March

$63,000

Other information:

1. Material is introduced at the beginning in department A and more material is added at the very end in department B.

2. Conversion costs are incurred evenly throughout both processes.

3. As the process in department A is completed, goods are immediately transferred to department B; as goods are completed in department B, they are transferred to finished goods.

4. Unit costs of production in department A in March were as follows:

Materials

$0.55

Conversion

0.40

Total

$0.95

5. The company uses the weighted-average method.

Instructions

a. Calculate the cost of goods transferred out of department B in March.

$117,720

b. Calculate the cost of the March ending work in process inventory in department B

Answer 1

a. Cost of Goods transferred out = $117717 or $117720 (due to rounding off)

b. Cost of ending WIP = $22683 or $22680

	Physical units	Transferred in	Material	Conversion
Work in Process Beginning	15000
Started during the period	46000
To account for	61000
Units transferred	45000	45000	45000	45000
Work in Process Ending	16000	16000	0	6000
Accounted for	61000
Equivalent units		61000	45000	51000
	Transferred in	Material	Conversion	Total
Cost of Beginning Work in Process	$             9,500	$                    -	$              11,200	$             20,700
Cost added during the period	$           43,700	$           13,000	$              63,000	$          119,700
Total Cost to account for	$           53,200	$           13,000	$              74,200	$          140,400
Equivalent units of Production	61000	45000	51000
Cost per equivalent unit	$               0.87	$               0.29	$                   1.45	$                 2.62
	Transferred in	Material	Conversion	Total
Units Completed and transferred out
Units transferred to next department	45000	45000	45000
Cost per equivalent unit	$               0.87	$               0.29	$                   1.45
Cost of units transferred out	$           39,246	$           13,000	$              65,471	$          117,717
	Transferred in	Material	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	16000	0	6000
Cost per equivalent unit	$               0.87	$               0.29	$                   1.45
Cost of Ending work in Process Inventory	$           13,954	$                    -	$                8,729	$            22,683
Total Costs Accounted for	$           53,200	$           13,000	$              74,200	$          140,400