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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

ekkarill92 answered 2 years ago
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