Question

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Work in Process—Assembly Department

Bal., 7,000 units, 70% completed 28,210 To Finished Goods, 161,000 units ?

Direct materials, 165,000 units @ $2 330,000

Direct labor 363,100

Factory overhead 141,270

Bal. ? units, 60% completed ?

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

1. Cost of beginning work in process inventory completed this period. $

2. Cost of units transferred to finished goods during the period. $

3. Cost of ending work in process inventory. $

4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. $

b. Did the production costs change from the preceding period?

c. Assuming that the direct materials cost per unit did not change from the preceding period,

did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?

Answer 1

		Equivalent units
	Physical units	Material	Conversion
Beginning WIP	7,000	0	2,100 (7,000*30%)
Units started and completed (161,000-7,000)	154,000	154,000	154,000
Ending WIP	11,000	11,000	6,600 (11,000*60%)
Total		165,000	162,700

	Material	Conversion
Cost incurred during the period	$330,000	$504,370
Equivalent units	165,000	162,700
Cost per equivalent units	$2	$3.1

1. Cost of beginning WIP completed this year :

Beginning balance	$28,210
Add: Cost added during the period (2,100*$3.1)	6,510
Total cost of beginning WIP	$34,720

2. Cost of units transferred to finished goods during this period:

Cost of beginning WIP	$34,720
Cost of units started and completed (154,000*$5.1)	785,400
Total cost of units transferred	$820,120

3. Cost of ending work in process inventory:

Direct material (11,000*$2)	$22,000
Conversion cost (6,600*$3.1)	20,460
Total cost of ending work in process	$42,460

4.

Cost per unit of beginning WIP = $34,720 / 7,000 = $4.96 per unit

b. Yes

c. Increase

Current year conversion cost per unit = $3.1

Preceding year conversion cost per unit = $2.96 (4.96-2)

Difference = $0.14 Increase