Question

Crane Company manufactures bowling balls through two processes: Molding and Packaging. In the Molding Department, the urethane, rubber, plastics, and other materials are molded into bowling balls. In the Packaging Department, the balls are placed in cartons and sent to the finished goods warehouse. All materials are entered at the beginning of each process. Labor and manufacturing overhead are incurred uniformly throughout each process. Production and cost data for the Molding Department during June 2020 are presented below.

Production Data		June
Beginning work in process units		0
Units started into production		26,400
Ending work in process units		2,400
Percent complete—ending inventory		40	%

Cost Data
Materials		$237,600
Labor		64,320
Overhead		135,360
Total		$437,280

a.

Prepare a schedule showing physical units of production.
b.

Determine the equivalent units of production for materials and conversion costs.
c.

Compute the unit costs of production.
d.

Determine the costs to be assigned to the units transferred out and in process for June.
e.

Prepare a production cost report for the molding department for the month of June.

Prepare a schedule showing physical units of production.

Answer 1

(a)

Physical Units
Units to be accounted for
Work in process, June 1	0
Started into production	26400
Total units	26400
Units accounted for
Transferred out	24000
Work in process, June 30	2400
Total units	26400

(b)

	Materials	Conversion costs
Total equivalent units	26400	24960

Explanations :-

	Materials	Conversion costs
Units started & completed	24000	24000
Ending WIP
(2400 * 100%)	2400
(2400 * 40%)		960
	26400	24960

(c)

	Materials	Conversion costs	Total unit cost
Units costs	$       9.00	$                       8.00	$    17.00

Explanations :-

	Materials	Conversion costs
Cost incurred	$237,600	$199,680
÷ Equivalent units	26400	24960
	$       9.00	$                       8.00

(d)

Transferred Out	$        408,000
Work in Process, June 30	$          29,280

Explanations :-

Transferred Out
Units transferred	24000
X Total unit cost	$17
	$        408,000
Work in Process, June 30
Materials (2400 * $9)	$21,600
Conversion (960 * $8)	$7,680
	$29,280

(e)

		Equivalent units
Quantities	Physical units	Materials	Conversion
Units to be accounted for
Work in process, June 1	0
Started into production	26400
Total units	26400
Units accounted for
Transferred out	24000	24000	24000
Work in process, June 30	2400	2400	960
Total units	26400	26400	24960
Costs		Materials	Conversion	Total
Unit costs
Total costs		$237,600	$199,680	$437,280
Equivalent units		$26,400	$24,960
Unit costs		$             9	$                 8	$          17
Cost to be accounted for
Work in process, June 1				$0
Started into production				$437,280
Total costs				$437,280
Cost Reconciliation Schedule
Cost accounted for
Transferred out				$408,000
Work in process, June 30
Materials			$21,600
Conversion costs			$7,680	$29,280
Total costs				$437,280