Question

In: Accounting

Bakul Mala Manufacturing, which uses the First-In, First-Out costing method, produces a product that passes through...

Bakul Mala Manufacturing, which uses the First-In, First-Out costing method, produces a product that passes through two departments: A and B. In the Department A, all materials are added at the beginning of the process and all other manufacturing inputs are added uniformly.

The following information relates to Department A for the month of July:

a. Beginning Work-In-Process, 1 July: 400,000 units (20% complete with respect to conversion costs). The costs assigned to this work are as follows:

Direct Materials = $80,000
Conversion costs = $40,000

b. Ending Work-In-Process, 31 July: 100,000 units (80% complete with respect to conversion costs).

c. Units completed and transferred out: 500,000 units.

The following costs were added during July:

Direct Materials = $200,000
Conversion Costs = $100,000

Required:

SHOW CALCULATION FOR EACH QUESTION IN THE RESPONSE BOX.

1. Prepare a physical flow schedule.

2. Prepare a schedule of equivalent units.

3. Calculate the cost per equivalent unit.

4. Calculate the cost of goods transferred out and the cost of Ending Work-In-Process.

5. Would you recommend Bakul Mala Manufacturing to continue to employ the First-In, First-Out costing method, or should it consider alternative costing methods (i.e. the weighted average method)? Briefly explain and justify your recommendation.

Expert Solution

Part-1 : Physical Flow
Beginning WIP inventory	400000
Units started (100000+500000-400000)	200000
Less: Ending inventory	100000
Units completed and transferred	500000

Part-2 Statement showing Computation of Equivalent Unit- FIFO- Bakul Mala Manufacturing
Particular	Whole units	Materials	Conversion
Beginign WIP (100%, 80%)	400000	0	320000
Unit Started & Completed	100000	100000	100000
Ending inventory (100%, 80%)	100000	100000	80000
Units accounted for	600000	200000	500000
Equivalent Unit of Production
	Materials	Conversion
Equivalent units of production	200000	500000

Part-3 Statement showing Cost per Equivalent Unit
Particular	Tototal	Material	Conversion
Current costs incurred	$300,000.00	$200,000.00	$100,000.00
Tototal cost to account for (a)	$300,000.00	$200,000.00	$100,000.00
Equivalent units (b)		200000	500000
Cost per Equivalent unit (a/b)		$1.00	$0.20

Computation of Ending WIP
Material (100000*1)	$100,000.00
Conversion (80000*0.20)	$16,000.00
Tototal Ending Work in process	$116,000.00

Computation of Cost of units completed and transferred
Material (100000*1)	$100,000.00
Conversion (420000*0.20)	$84,000.00
Tototal	$184,000.00

ekkarill92 answered 2 years ago

Weighted Average Method, Unit Costs, Valuing Inventories Walser Inc. produces a product that passes through two...

Weighted Average Method, Unit Costs, Valuing Inventories Walser Inc. produces a product that passes through two processes. During February, equivalent units were calculated using the weighted average method: Units completed 200,000 Add: Units in EWIP X Fraction complete: (57,930 X 30%) 17,379 Equivalent units of output (weighted average) 217,379 Less: Units in BWIP X Fraction complete: (20,000 X 80%) 16,000 Equivalent units of output (FIFO) 201,379 The costs that Walser had to account for during the month of February were...

FIFO Method, Single Department Analysis, One Cost Category Hatch Company produces a product that passes through...

FIFO Method, Single Department Analysis, One Cost Category Hatch Company produces a product that passes through three processes: Fabrication, Assembly, and Finishing. All manufacturing costs are added uniformly for all processes. The following information was obtained for the Fabrication Department for June: Work in process, June 1, had 90,000 units (40 percent completed) and the following costs: Direct materials $72,740 Direct labor 109,000 Overhead 36,000 During the month of June, 180,000 units were completed and transferred to the Assembly Department,...

Peaceful Ltd. manufactures a single product, which passes through the Forming Department and Packing Department. Manufacturing...

Peaceful Ltd. manufactures a single product, which passes through the Forming Department and Packing Department. Manufacturing begins in the Forming Department. All units are then transferred to Packing Department. In the Packing Department, further materials are added and processed until completion, and transferred to the finished goods inventory. Overhead is allocated on the basis of 140% of direct labour cost. Work in process in the Packing Department on 1 Aug was 90,000 units (Materials : 40% complete; Conversion : 60%...

Briefly write about the first in first out process costing method.

The Zee manufacturing company produces a single product which goes through one process only. The manufacturing...

The Zee manufacturing company produces a single product which goes through one process only. The manufacturing cycle takes a month. The company started its manufacturing operation on 1st February, 2018 and costs of production for this month were as follows: Material Rs. 41,412 Labor Rs. 32,054 FOH Rs. 23,870 The production statistics for the month were as follow: Units completed and transfer to finished goods store Rs. 6,500 Unit in Process on February 31, 2018 was 1,600 (Material 40%, Labor...

3. Gitano Manufacturing uses the weighted-average method in its process costing system. It manufactures a product...

3. Gitano Manufacturing uses the weighted-average method in its process costing system. It manufactures a product that passes through two processing departments—Blending, and Packaging. On March 1, 2019, the first department, Blending, had a zero beginning balance. During March, 40,000 gallons were started into production. During the month, 32,000 gallons were completed, and 8,000 remained in process, partially completed. Conversion costs are added evenly throughout each process and direct materials are added at the beginning of each process. During March,...

If Dave’s Doors uses the First-in First-out (FIFO) costing system, it is assumed that the first...

If Dave’s Doors uses the First-in First-out (FIFO) costing system, it is assumed that the first units “available for sale” are the first units sold. Therefore, Dave’s will sell its beginning inventory first, then units that they purchased on 9/4, and then on 9/12 until they have accounted for the 45 units sold. Use the table for Dave’s FIFO Costing to complete the requirements below. Dave’s FIFO Costing Number of units Cost per unit Total Costs Beginning Inventory – Sold...

7. Product Cost Method of Product Costing Voice Com, Inc. uses the product cost method of...

7. Product Cost Method of Product Costing Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 4,620 cell phones are as follows: The Variable costs per unit are: The Fixed costs are: Direct materials $61 Factory overhead $199,000 Direct labor 30 Selling and administrative expenses 69,900 Factory overhead 22 Selling and administrative expenses 22 Total variable cost per unit $135 Voice Com desires a profit equal to...

Product Cost Method of Product Costing Voice Com, Inc. uses the product cost method of applying...

Product Cost Method of Product Costing Voice Com, Inc. uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,320 cell phones are as follows: Variable costs per unit: Fixed costs: Direct materials $76 Factory overhead $199,000 Direct labor 30 Selling and administrative expenses 69,100 Factory overhead 22 Selling and administrative expenses 18 Total variable cost per unit $146 Voice Com desires a profit equal to a 15% rate of return...

Question 1 AKWASI produces a specialized product CESAR. The product passes through three (3) cost centers...

Question 1 AKWASI produces a specialized product CESAR. The product passes through three (3) cost centers namely: machining, assembly and painting shop. Data relating to the cost centers is as below: Machinin g Assembly Painting shop Engineering shop Stores Number of employees 81 51 39 30 24 Engineering shop-- service 18,000 12,000 10,000 - - Stores (orders) 180 135 90 45 - At a management meeting dated 24th September 20X0, the following overheads were budgeted for the production and service...