Question

Process Costing.

Our company manufactures Chemical X. Assume the company uses a weighted average. Separate direct materials and conversion costs.

Chemical X is comprised of two liquids, liquids A and liquid B. The formula of Chemical X is 60% liquid A, 40% liquid B. 40% of the mixed liquid is added at the beginning of the process; 60% is added at the very end.

This month, the liquid mix costs $43 per gallon.

At the beginning of the month, there was 1,400 gallon in process, 70% through the process. The total costs in beginning Work in process are $24,080 for materials and $96,760 for conversion costs.

During the month, 13,000 gallons were started. Conversion costs were $467,400 for the month. Compute direct materials costs (hint use DM EUP under FIFO).

At the end of the month, there were 1,600 gallons in process, 6% through the process.

a) How many units were started AND completed? Completed?

b)Using FIFO, calculate equivalent units produced.

c) Using your answer in b. What is the total material cost added this month?

d) Using FIFO, calculate the cost per equivalent unit produced.

e) Using FIFO, what is the journal entry for the transferred to finished goods?

f) Using FIFO, what are the unit costs? (hind: you should have 2 numbers)

g) Using WA, calculate equivalent units of production.

h) Using Wa, what is the cost per equivalent unit of production.

i) Using WA, what is the journal entry for transferred to finished goods?

j) Using WA, what is the cost per unit?

Answer 1

at WAC:
	Phy units	DM	Conv. Cost	total
WIP beg.	1400	1400	1400
Started & compl.	11400	11400	11400
Transferred out	12800
WIP end	1600	640	96
Equivalent units		13440	12896
Total costs
WIP beg.		24080	96760
During month		559000	467400
Total costs		583080	564160
Cost per Eq. unit		43.38	43.75
cost of Tranf. To FG		555314	559960	1115275
cost of WIP end		27766	4200	31965
at FIFO:
	Phy units	DM	Conv. Cost	total
WIP beg.	1400	560	980
Started & compl.	11400	11400	11400
Transferred out	12800
WIP end	1600	640	96
Equivalent units		12600	12476
Cost in month		559000	467400
Cost per Eq. unit		44.37	37.46
WIP beg cost		24080	96760	120840
add: during month		24844	36715	61559
total WIP beg cost		48924	133475	182399
Started & compl.		505762	427089	932851
cost of Tranf. To FG		554686	560563	1115250
cost of WIP end		28394	3597	31991

Answer to questions:
a)
Units started and completed	11400
completed	12800
b) FIFO, Equivalent unit:
Material	Conver cost
12600	12476
c) Total mat. Cost added
this month = 13000*43=559000
d) FIFO, Cost of Eq. unit=
Material	Conver cost
44.37	37.46
e) journal entry to transfer to FG:
	Dr. $	Cr. $
Finished Goods	1115250
Work In Process		1115250
f) Unit cost, FIFO =
1115250/12800 = 87.13
g) WA, Equivalent unit:
Material	Conver cost
13440	12896
d) WA, Cost of Eq. unit=
Material	Conver cost
43.38	43.75
e) journal entry to transfer to FG:
	Dr. $	Cr. $
Finished Goods	1115275
Work In Process		1115275
f) Unit cost, WA =
1115275/12800 = 87.13