Question

In: Accounting

1. A company uses a process costing system and the weighted average method for inventory costs....

1. A company uses a process costing system and the weighted average method for inventory costs. The following information is available regarding direct labor for the current year:

Work in Process, January 1 5,500 units, 80% complete
Work in Process, December 31 8,800 units, 40% complete
Units completed and transferred to finished goods 46,900 units
Direct labor costs during the year $266,300


(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).

2. Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing.

Beginning Work in Process inventory:
       Physical units 5,000 units
       % complete for materials 70%
       % complete for labor and overhead 25%
       Materials cost from May $7,350
       Labor and overhead cost from May $3,125
Product started and completed:
       Physical units 40,000 units
Ending Work in Process inventory:
       Physical units 4,000 units
       % complete for materials 40%
       % complete for labor and overhead 10%
Manufacturing costs for June:
       Materials $96,975
       Labor and overhead $79,470


Compute equivalent units for direct materials, direct labor and overhead for June.

3. A company has two products: A and B. It uses a plantwide overhead allocation method based on activity 2 and has prepared the following analysis showing budgeted costs and activities. Use this information to compute (a) the company's plantwide overhead rate and (b) the amount of overhead allocated to Product A.

Budgeted Activity

Activity Cost Pool		 Budgeted
Overhead Cost
Product A
Product B
Total
Activity 1 $160,000 400 1,600 2,000
Activity 2 $110,000 2,000 1,000 3,000
Activity 3 $180,000 1,200 10,800 12,000
Total budgeted overhead $450,000

Solutions

Expert Solution

1.

Weighted average cost
Beggining units 5500 Transferred out 46,900
Started intro production 50200 Ending units 8,800
Units accounted for 55700 55700
Equivalent units Labor
Units transferred                      A 46900
Ending Units 8,800
Completion 40%
B 3520
Total units 50420
Cost per equivalent units
Particulars Labor
Cost to be accounted for 266300
Total eqivalent units 50420
Cost per equivalent unit 5.28
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

2.

FIFO method
Beggining units 5000 Transferred out 45,000
Started into production 44000 Ending units 4,000
49000 49000
Equivalent units Material Conversion
Beginning units 5000 5000
Completion in current period 30% 75%
A 1500 3750
Units started and completed 40000 40000
Completion 100% 100%
B 40000 40000
Ending Units 4,000 4,000
Completion 40% 10%
C 1600 400
Total units A+B+C 43100 44150

3. Plantwide overhead rate activity 2 = 450000/3000= 150

For product A = 150*2000= 300000

ekkarill92 answered 2 years ago
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