Question

Betty DeRose, Inc. operates two departments, the handling department and
the packaging department. During April, the handling department reported
the following information:

                                           % complete      % complete
                                units         DM           conversion

work in process, April 1        19,000        80%             35%

units completed during April    71,000

work in process, April 30       11,000        45%             70%

The cost of beginning work in process and the costs added during April
were as follows:

                               Direct materials      Conversion

work in process, April 1          $139,810               ???

costs added during April 376,650               ???

total costs 516,460 ???

Using weighted average, the cost of goods completed and transferred out
for the handling department totaled $880,400. Using FIFO, the handling
department's work in process inventory balance at April 30 was $64,570.

Calculate the cost of conversion in the work in process account at
April 1.

I drew my table and calculated my Equivalent Units under FIFO and W/A . What I cannot figure out is how to solve for either the conversion April 1 WIP cost or conversion Costs added during April 1st in order to solve the problem. I know that the total conversion costs = $440,720. I got this by x/78700 = $5.6 thus, $5.6 x 78,700 = $440,720.

UNITS DM CC DM CC

BWIP 19000 80% 35% 15,200 6,650

+UNITS STARTED 63,000 FIFO EQUIV UNITS 60,750 72,050

= TOTAL UNITS 82,000 W/A EQUIV UNITS 75,950 78,700

UNITS COMPLETE

AND TRANS OUT 71000 100% 100% 71,000 71,000

=END WIP 11,000 45% 70% 4,950 7,700

DM UNIT COSTS = $516,460/75,950 = $6.8

CC UNIT COSTS = $440,720/78,700 = $5.6

TOTAL UNIT COSTS = $6.8 + $5.6 = $12.4

COST OF GOODS COMPLETED & TRANSFERED OUT = 71,000 X $6.8 + $n = $880,400

THUS, $880,400/$71,000 = $12.4 this is how I was able to get the $5.6 per unit cost

DM: Equivalent units in ending WIP X Unit Costs

4,950 X $6.8 = $33,660

CC: Equivalent units in ending WIP X unit costs

7,700 X $5.6 = $43,120

Cost of ending WIP = $33,660 + $43,120 = $76,780

COGC & TO $880,400

EWIP + $76,780

= TC 957,180 $516,460 + $440,720 = $957,180

In essence, I know that I'm on the right path, could you please explain clearly how I go about calculating the missing costs figures in order to solve the problem.

Answer 1

Calculated number from Weighted average method
cost of goods completed and transferred out for the handling department totaled $		880,400
Less: cost assigned to unit transferred out (material cost) (71000*6.8)		482,800
cost assigned to unit transferred out (conversion cost)		397,600
Divided by: unit transferred		71,000
conversion cost per unit		5.60
Multiplied by: equivalent unit for conversion cost as per weighted average method		78,700
Total conversion cost		440,720
Calculated number from FIFO method
Using FIFO, the handling department's work in process inventory balance at April 30 was		64,570
Less: material cost in work in process inventory balance at April 30 (4950*6.20)		30,690
Conversion cost in work in process inventory balance at April 30		33,880
Divided by: equivalent unit in Ending inventory for conversion cost		7,700
Conversion cost per unit		4.40
Multiply by: total equivalent unit of production for conversion cost		72,050
Conversion cost added during month		317,020
Total conversion cost		440,720
Less: conversion cost added during month		317,020
Conversion cost in beginning work in progress		123,700

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit = total cost to be accounted for / Equivalent Units of production
Step 4	Cost assigned to units transferred out = units completed and transferred out * Cost per Equivalent Unit
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit

Betty DeRose, Inc.
handling Department production Report
Weighted average Method
Month ended April 30
Summary of Physical units
Units in beginning WIP inventory			19000
Units started during month (82000-19000)			63000
Total unit to be accounted for			82000
Units completed and transferred out			71000
Units in ending WIP inventory			11000
Total unit accounted for			82000
Equivalent Units of production
Particulars	Physical units	Direct material		Conversion Cost
		%	units	%	units
units in beginning WIP inventory	19000	100%	19000	100%	19000
Units in Started and completed (71000-19000)	52000	100%	52000	100%	52000
units in ending WIP inventory	11000	45%	4950	70%	7700
Equivalent Units of production			75950		78700
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	139,810
Cost incurred during Month (Add)	376,650
total cost to be accounted for	516460	440720	957180
cost per Equivalent Unit
total cost to be accounted for	516460	440720
Equivalent Units of production	75950	78700
Cost per Equivalent Unit	6.80	5.60	12.40
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
units completed and transferred out	71000	71000
Cost per Equivalent Unit	6.8	5.6
cost assigned to units transferred out	482800	397600	880400
cost assigned to units ending work in progress
equivalent units in ending WIP inventory	4950	7700
Cost per Equivalent Unit	6.8	5.6
cost assigned to units ending work in progress	33660	43120	76780
Total cost assigned			957180

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4	Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For direct material 80% unit completed in previous period. It means remaining 20% completed in this month.
For conversion cost 35% unit completed in previous period. It means remaining 65% completed in this month.

Betty DeRose, Inc.
handling Department production Report
First in First out (FIFO) Method
Month ended April 30
Summary of Physical units
Units in beginning WIP inventory			19000
Units started during month (82000-19000)			63000
Total unit to be accounted for			82000
Units completed and transferred out			71000
Units in ending WIP inventory			11000
Total unit accounted for			82000
Equivalent Units of production
Particulars	Physical units	Direct material		Conversion Cost
		%	units	%	units
units in beginning WIP inventory	19000	20%	3800	65%	12350
Units in Started and completed (71000-19000)	52000	100%	52000	100%	52000
units in ending WIP inventory	11000	45%	4950	70%	7700
Equivalent Units of production			60750		72050
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	139,810	123700	263510
Cost incurred during Month (Add)	376,650	317020	693670
total cost to be accounted for	516460	440720	957180
cost per Equivalent Unit
Cost incurred during Month	376650	317020
Equivalent Units of production	60750	72050
Cost per Equivalent Unit	6.20	4.40	10.60
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
Direct material	139810
Conversion Cost	123700
Cost in beginning WIP		263510
Direct material (3800*6.2)	23560
Conversion Cost (12350*4.4)	54340
Cost incurred for complete beginning WIP		77900
Direct material (52000*6.2)	322400
Conversion Cost (52000*4.4)	228800
Cost of units in Started and completed		551200
cost assigned to units transferred out		892610
cost assigned to units ending work in progress
Direct material (4950*6.2)	30690
Conversion Cost (7700*4.4)	33880
cost assigned to units ending work in progress		64570
Total cost assigned		957180