Question

UK Services, LLC uses a process costing system. Raw materials are combined at the start of the process and blended and heated under pressure for a specific amount of time. The following information has been gathered from the 1^st quarter of 2020:

	Raw Material Mix	Conversion Cost	Gallons
Beginning W-i-P	$6,500	$13,000	5,000
Started during period	$140,000	$800,000	100,000

UK Services completed 93,000 gallons during the month. The process engineer informs you that the WIP was 30% complete at the beginning of the period and ending WIP is at 80% complete.

Required:
Prepare the Process Costing Report with the following items highlighted:

1. I/O Reconciliation
2. Costs of input
3. Equivalent units of production
4. Cost per equivalent unit of production (use 4 decimal places)
5. Cost of finished goods transferred out and cost of ending work-in-process inventory (use 0 decimal places)

Answer 1

UK Services, LLC
Production Cost Report
For the 1st Quarter 2020
a) Input/Output reconciliation
Units to be accounted for	Physical units
Units in beginning WIP inventory	5,000
Units started/transferred in during the period	100,000
Total units to be accounted for	105,000
Transferred out from Beginning inventory	5,000
Units started and completed during the period	88,000
Units transferred out	93,000
Units in ending WIP inventory	12,000
Total units accounted for	105,000
b) Cost of input
Particulars	Material	Conversion Cost	Total
Cost in beginning WIP inventory	$           6,500.00	$             13,000.00	$           19,500.00
Cost incurred during the period	$      140,000.00	$           800,000.00	$        940,000.00
c) Equivalent units of Production
	Material	Conversion Cost
Units in beginning WIP (A)	5000	5000
% of completion of beginning WIP in previous period (B)	30%	30%
% of beginning WIP completed this period [C=100%-B]	70%	70%
Equivalent units in beginning WIP [D=A×C]	3,500	3,500
Units both started and completed in current period (E)	88,000	88000
Units of ending WIP (F)	12,000	12000
Percentage of completion of ending WIP (G)	80%	80%
Equivalent units in ending WIP (H=F×G)	9,600	9,600
Total equivalent units (D+E+H)	101,100	101,100
d) Cost per Equivalent Unit of Production
	Material	Conversion Cost	Total
Cost to be accounted for (a)	$      140,000.00	$           800,000.00	$        940,000.00
Total Equivalent unit to be accounted for (b)	101,100	101,100
Cost per Equivalent Unit (a/b)	1.3848	7.9130	9.2977
e) Assignment of Cost to the Units transferred out & Units in ending WIP
	Material	Conversion Cost	Total
Cost in beginning WIP inventory (A)	$                 6,500	$                   13,000	$                 19,500
Transferred in cost for opening WIP (B)= {Cost per Equivalent unit* Equivalent unit}	$                 4,847	$                   27,695	$                 32,542
	(3500*1.3848)	(3500*7.9130)
Beginning Inventory ©=A+B	$               11,347	$                   40,695	$                 52,042
Cost assigned to the units transferred out (D)= {Cost per Equivalent unit* Equivalent unit}	$            121,860	$                 696,340	$              818,200
	(88000*1.3848)	(88000*7.9130)
Cost assigned to the ending WIP inventory (E)= {Cost per Equivalent unit* Equivalent unit}	$               13,294	$                   75,964	$                 89,258
	(9600*1.3848)	(9600*7.9130)
Total Cost accounted for			$        959,500.00
Summery of Cost to be accounted for and Accounted for as
Cost to be accounted for		Accounted for as
Cost in beginning WIP inventory	$         19,500.00	Cost transferred Out
		Beginning	$                 52,042
Cost Added		Started & Completed	$              818,200
Material	$      140,000.00
Conversion Cost	$      800,000.00	Closing WIP	$                 89,258
Total	$      959,500.00	Total	$              959,500