Question

In: Accounting

Stilton Audio is a producer of speakers and amplifiers which are housed in plastic cabinets. Currently...

Stilton Audio is a producer of speakers and amplifiers which are housed in plastic cabinets. Currently production of the plastic cabinets as well as final product assembly is completed in-house. For accounting purposes, Stilton Audio uses the weighted average method, where plastic cabinets speaker and amplifier components are added at the beginning of the assembly process. The following are cost and production data for the assembly process for April: Production: Units in process, April 1, 60 percent complete 60,000 Units completed and transferred out 150,000 Units in process, April 30, 20 percent complete 30,000 Costs: WIP, April 1: Plastic cabinets $ 1,200,000 Speaker and amplifier components 12,600,000 Conversion costs 5,400,000 Costs added during April: Plastic cabinets 2,400,000 Speaker and amplifier components 25,200,000 Conversion costs 8,640,000 Required:

1. Prepare a physical flow analysis for the assembly department for April.

2. Calculate equivalent units of production for the assembly department for April.

3. Calculate unit cost for the assembly department for April.

4. Calculate the cost of units transferred out and the cost of EWIP inventory.

5. Prepare a cost reconciliation for the assembly department for April.

Solutions

Expert Solution

1. Prepare a physical flow analysis for the assembly department for April.

Physical units Physical units
Beginning Units 60000 Units completed and transferred out 150000
Unit started 120000 Ending units 30000
Total units 180000 Total units 180000

2. Calculate equivalent units of production for the assembly department for April.

Plastick Speaker and amplifier Conversion Cost
Unit completed and transferred out 150000 150000 150000
Ending work in process 30000 30000 6000
Equivalent unit 180000 180000 156000

3. Calculate unit cost for the assembly department for April.

Plastic Speaker and amplifier components Conversion Cost
Beginning work in process 1200000 12600000 5400000
Cost added 2400000 25200000 8640000
Total Cost 3600000 37800000 14040000
Equivalent Unit 180000 180000 156000
Cost per equivalent unit 20 210 90

4. Calculate the cost of units transferred out and the cost of EWIP inventory.

Cost of unit transferred out = (20+210+90)*150000 = $48000000

Cost of ending work in process = (230*30000+90*6000) = 7440000

5. Prepare a cost reconciliationfor the assembly department for April.

Cost to be account for
Beginning work in process 19200000
Cost added 36240000
Total cost to be accounted for 55440000
Cost accounted as
Cost of units transferred out 48000000
Cost of ending work in process 7440000
Total Cost accounted as 55440000

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