Question
In: Accounting
Jackson Ltd. uses an automated process in its manufacturing operations. On September 1, the company had...
Jackson Ltd. uses an automated process in its manufacturing operations. On September 1, the company had 15,000 units in beginning work in process which were 60% complete with respect to conversion. During the month of September, it started 100,000 into production. On September 30, there were 20,000 units in process, which were 30% complete with respect to conversion.
Direct materials are added at the beginning of the process, and no units are spoiled in production. The beginning inventory had direct materials costs of $135,900 and conversion costs of $38,500. During the month, the company issues $620,000 of direct materials and incurred $199,400 of conversion costs.
Required
1. Prepare a production cost worksheet using the FIFO method:
a) Calcualte the physical units to account for.
b) Compute equivalent units for DM and CC.
c) Summarize total costs to account for.
d) Compute cost per equivalent unit.
e) Assign total costs to units completed and WIP, ending.
2. Prepare the journal entries affecting WIP.
3. Prepare the t-account for WIP.
Solutions
Expert Solution
| UNITS TO ACCOUNT FOR: | |||||||
| Beginning Work in Process units | 15,000 | ||||||
| Add: Units Started in Process | 1,00,000 | ||||||
| Total Units to account for: | 1,15,000 | ||||||
| UNITS TO BE ACCOUNTED FOR: | |||||||
| Units completed from Beginning WIP | 15000 | ||||||
| Units started and completed | 80,000 | ||||||
| Ending Work in Process | 20,000 | ||||||
| Total Units to be accounted for: | 1,15,000 | ||||||
| Equivalent Units: | |||||||
| Material Cost | Conversion | ||||||
| % Completion | Units | % Completion | Units | ||||
| Units completed from Beg. WIP | 0% | 0 | 40% | 6,000 | |||
| Units started and completed | 100% | 80,000 | 100% | 80,000 | |||
| Ending Work in Process | 100% | 20,000 | 30% | 6,000 | |||
| Total Equivalent units | 1,00,000 | 92,000 | |||||
| TOTAL COST TO ACCOUNT FOR: | |||||||
| Material | Conversion | ||||||
| Beginning work in Process | 1,35,900 | 38,500 | |||||
| Cost Added during May | 6,20,000 | 1,99,400 | |||||
| Total Cost to account for: | 7,55,900 | 2,37,900 | |||||
| Total Cost to account for: | 9,93,800 | ||||||
| COST PER EQUIVALENT UNIT: | |||||||
| Material | Conversion | ||||||
| Cost added during the year | 6,20,000 | 1,99,400 | |||||
| Equivalent Units | 1,00,000 | 92,000 | |||||
| Cost per Equivalent unit | 6.2 | 2.17 | |||||
| TOTAL COST ACCOUNTED FOR: | |||||||
| Units Completed from Beginning WIP (15000 units) | |||||||
| Equivalent unit | Cost per EU | Total Cost | |||||
| Beginning Cost | 174400 | ||||||
| Material | 0 | 6.2 | 0 | ||||
| Conversion Cost | 6,000 | 2.17 | 13020 | ||||
| Cost of units completed from Beg WIP | 187420 | ||||||
| Units started and Transferred out (80,000 units) | |||||||
| Equivalent unit | Cost per EU | Total Cost | |||||
| Material | 80,000 | 6.2 | 496000 | ||||
| Conversion Cost | 80,000 | 2.17 | 173600 | ||||
| Cost of units started and completed | 669600 | ||||||
| Total cost of units completed (187420+669600) | 857020 | ||||||
| Ending Work in process (20,000 units) | |||||||
| Equivalent unit | Cost per EU | Total Cost | |||||
| Material | 20,000 | 6.2 | 124000 | ||||
| Conversison Cost | 6,000 | 2.17 | 13020 | ||||
| Total cost of Ending Work in process: | 1,37,020 | ||||||
| Journal entries: | |||||||
| S.no. | Accounts title and explanations | Debit $ | Credit $ | ||||
| a. | Work in process inventory | 8,19,400 | |||||
| Raw material inventory | 6,20,000 | ||||||
| Labor and overheads account | 1,99,400 | ||||||
| (for current cost incurred) | |||||||
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