Question

Assembly Department uses a process cost accounting systm and a weighted-average cost flow assumption. The department adds minerals at the beginning of the process and incur conversion costs uniformly throughout the process. During July, $190,000 of materials cost and $135,000 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of materials costs and $13,000 of conversion costs.

Other Data for the month of July are as follows:
Beginning work in process Inventory 7/1    25,000 units (40% complete)
Units completed and transferred out. 90,000 units
Ending work in process inventory 7/31       30,000 units (30% complete)

Instructions
1. How many physical units have to be accounted for in July?
2. What are the equivalent units of production for materials and for conversion costs for the month of July?
3. What is the total cost assigned to the 90,000 units that were transferred out of the process in July?
4. What is the remaining total cost of inventory within the Assembly department as of July 31?

Answer 1

1.

Units charged to production
Work in process beginning	25,000
Started into production	95,000
Total units accounted for by the Assembly department	120,000

2.

	Whole Unit	Direct Materials	Conversion
Transferred to finished goods in Nov	90,000	90000	90000
Inventory in process, Nov 30	30,000	30000	9000
Equivalent units	120,000	120000	99000

Cost per equivalent unit	Direct Materials	Conversion
Work in process beginning	80000	13000
Costs added during June	190000	135000
Total costs for Assembly Dept	270000	148000
Total equivalent units	120000	99000
Cost per equivalent unit	2.25	1.49

3.

Costs accounted for
Transferred out		337045	[90,000*(2.25+1.49)

4.

Work in Process, July 31
Materials	67500		[30000*2.25]
Conversion costs	13455	80955	[9000*1.49]

Workings:

Costs accounted for
Transferred out		337045	[90,000*(2.25+1.49)
Work in Process, July 31
Materials	67500		[30000*2.25]
Conversion costs	13455	80955	[9000*1.49]
Total costs		418000

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