Question

Karlene Industries produces plastic ice cube trays in two processes:heating and stamping.All materials are added at the beginning of the Heating Department process.Karlene uses the weighted averaged method to compute equivalent units.

On 1 November 2016,the Heating Department had in process 1,000 trays that were 70%complete.During November,it started into production 12,000 trays.On 30 November 2016,2000 trays that were 60% complete were in process.

The following cost information for the Heating Department was also available.

Work in process,1 November

Direct material (100% complete) $640

Conversion costs (70% complete) $360

Balance in work in process, 1November $1,000

Costs incurred during November:

Direct material $3,000

Conversion costs:   

Direct labour $2,300

Manufacturing overhead $4,050 $6,350

Total production costs incurred during November $9,350

Required

1. Analysis of physical flow of units

2. Calculation of equivalent units

3. Calculation of units cost

4. Analysis of total costs

Answer 1

• All working forms part of the answer
• Requirement 1

Analysis of physical flow of units
Units to account for:
Beginning WIP	1,000
Units started this period	12,000
Total Units to account for	13,000
Total Units accounted for:
Completed & Transferred out	11,000
Ending WIP	2,000
Total Units accounted for	13,000

• Requirement 2

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	11,000	100%	11,000	100%	11,000
Units of ENDING WIP	2,000	100%	2,000	60%	1,200
Equivalent Units of Production			13,000		12,200

• Requirement 3

COST per EUP			Material		Conversion
Cost of Beginning WIP			$                640.00		$                                        360.00
Cost incurred during the period			$             3,000.00		$                                    6,350.00
Total Costs		Costs	$             3,640.00	Costs	$                                    6,710.00
Equivalent units of production		EUP	13,000	EUP	12,200
Cost per EUP			$              0.28		$                                      0.55

• Requirement 4 and working

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	11,000	$                      0.28	$             3,080.00
- Conversion	11,000	$                      0.55	$             6,050.00
Total Cost transferred Out				$                 9,130.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	2,000	$                      0.28	$                560.00
- Conversion	1,200	$                      0.55	$                660.00
Total cost of ending WIP				$                 1,220.00
Total costs accounted for					$                                  10,350.00

Costs to be accounted for:
Cost of Beginning WIP Inventory	$              1,000.00
Cost added to production during the period	$              9,350.00
Total Cost to be accounted for	$           10,350.00
Costs accounted for as follows:
Cost of units transferred out	$              9,130.00
Cost of Ending WIP Inventory	$              1,220.00
Total Cost accounted for	$           10,350.00