Question
In: Accounting
PlayTime Co produces Swingsets and assigns its costs using the process costing system. For the month...
PlayTime Co produces Swingsets and assigns its costs using the process costing system. For the month of January, the following information was provided regarding units processed:
| Units Completed and Transferred Out | 15,000 units |
| Units in Ending Inventory | 2,000 units |
The units in ending work in process inventory were 30% complete with respect to direct materials and 55% complete with respect to conversion costs.
In addition, PlayTime Co had the following costs associated with their product in the month of January:
| Beginning Work In Process - Direct Materials | $120,000 |
| Beginning Work In Process - Conversion Costs | $30,000 |
| Direct Materials Added | $600,000 |
| Conversion Costs Added | $200,000 |
What is the cost per unit? And, what is the cost assigned to units in ending inventory?
|
Cost per Unit = $66.44 Ending Inventory = $120,879 |
||
|
Cost per Unit = $50.88 Ending Inventory = $101,768 |
||
|
Cost per Unit = $59.46 Ending Inventory = $118,928 |
||
|
Cost per Unit = $59.46 Ending Inventory = $43,050 |
||
|
Cost per Unit = $55.88 Ending Inventory = $111,765 |
||
|
Cost per Unit = $55.88 Ending Inventory = $40,294 |
||
|
Cost per Unit = $50.88 Ending Inventory = $36,742 |
||
|
Cost per Unit = $66.44 Ending Inventory = $43,407 |
Solutions
Expert Solution
Using Weighted Average Cost Method because no details about Beginning Work in Process
| Particulars | Units | % Materials | EUP Materials | % Conversion | EUP Conversion |
| Units Completed and Transferred Out | 15,000 | 100% | 15,000 | 100% | 15,000 |
| Units in Ending Inventory | 2,000 | 30% | 600 | 55% | 1,100 |
| Total Units | 17,000 | 15,600 | 16,100 | ||
Working Notes
EUP Stands for Equivalent Annual Units of Production
EUP Materials = Units * % Materials
EUP Conversion = Units * % Conversion
| Particulars | Materials | Conversion |
| Total Costs | 720,000 | 230,000 |
| ÷ Equivalent Units of Production | 15,600 | 16,100 |
| Cost per Equivalent Annual Units | 46.15 | 14.29 |
Total Cost per Equivalent Annual Unit = 46.15 + 14.29
= $ 60.44 per Unit
Working Notes
Total Direct Materials Cost = Beginning Direct Materials Cost + Cost Added During the Year
= 120,000 + 600,000
= $ 720,000
Total Conversion Costs = Beginning Conversion Costs + Conversion Costs Added during the Year
= 30,000 + 200,000
= $ 230,000
Cost of Ending Inventory = Units in Ending Inventory * Total Cost per Equivalent Annual Unit
= 2,000 * 60.44
= $ 120,879
It seems that there is some typing error in option A becuase Cost of Ending Inventory of $ 120,878 is using the Cost per Equivalent Unit of $ 60.44 not $ 66.44 so please check by looking at Calculation.
| Particulars | Amount |
| Cost per Unit | 60.44 |
| Cost of Ending Inventory | 120,879 |
Option A is the Correct Answer
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