Question

In: Accounting

Washington, Inc., makes three models of motorized carts for vacation resorts, X-10, X-20, and X-40. Washington...

Washington, Inc., makes three models of motorized carts for vacation resorts, X-10, X-20, and X-40. Washington manufactures the carts in two assembly departments: Department A and Department B. All three models are processed initially in Department A, where all material is assembled. The X-10 model is then transferred to finished goods. After processing in Department A, the X-20 and X-40 models are transferred to Department B for final assembly, and then transferred to finished goods.

There were no beginning work-in-process inventories on April 1. Data for April are shown in the following table. Ending work in process is 20 percent complete in Department A and 60 percent complete in Department B. Conversion costs are allocated based on the number of equivalent units processed in each department.

Total

X-10

X-20

X-40

Units started

570

330

230

Units completed in Department A

390

260

190

Units completed in Department B

220

150

Materials

$

365,750

$

71,250

$

99,000

$

195,500

Conversion costs:

Department A

$

291,850

Department B

52,250

Total conversion costs

$

344,100

Required:

a. What is the unit cost of each model transferred to finished goods in April?

b. What is the balance of work-in-process inventory on April 30 for Department A? Department B?


Solutions

Expert Solution

  1. Unit cost of each model calculation

Equivalent units Department A = 390 + (570-390) x 20% + 260 + (330-260) x 20% + 190 + (230-190) x20% = 898units

Conversion cost per unit Department A = $291,850 / 898 = $325 per unit

Equivalent units Department B = 220 + (260-220) x 60% + 150 + (190-150) x 60%

= 418 units

Conversion cost per unit Department B = $52,250 / 418 = $125 per unit

Material Cost per unit

= Material cost / units started
X-10 = $71,250 / 570 = $125 per unit
X-20 = $99,000 / 330 = $300 per unit
X-40 = $195,500 / 230 = $850 per unit

Unit Cost of each model

= material cost per unit + each department cost
X-10 = $125+325 = $450 per unit
X-20 = $300+325+125 = $750 per unit
X-40 = $850+325+125 = $1,300 per unit

B. Balance in work in process ending inventory



X-10 = 180 x $125 +180 x 20% x 325 = $34,200
X-20 = 70 x $300 + 70 x 20% x 325 = $25,550
X-40 = 40 x 850 + 40 x 20% x 325 = $36,600

Department A = $96,350


X-20 = 40 x (300+325) + 40 x 60% x 125 = $28,000
X-40 = 40 x (850+325) + 40 x 60% x 125 = $50,000

Department B = $78,000

Thank you

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ekkarill92 answered 1 year ago
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