Question

Accessory World makes floor mats for the automobile industry. Finished sets of mats must pass
through two departments: Cutting and Coating. Large sheets of synthetic material are cut to size in
the Cutting Department and then transferred to the Coating Department, where each set is sprayed
with a chemical coating for improved durability. The following information pertains to May activity
in the Cutting Department:
EXERCISE 18.10
Process Costing through
Two Departments:
Department I
LO18-2 through LO18-5
Cost data:
Total cost of beginning inventory on May 1 . . . . . . . . . . . . . . . . . . . . . . . . . $45,300
Direct materials costs incurred in May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,925
Conversion costs incurred in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,525
Cut sets transferred in during May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Physical units data:
Units in process, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 sets
Units started in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? sets
Units in process, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 sets
Percentage of completion data:
Direct materials, May 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60%
Conversion, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Cut sets transferred in, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Direct materials, May 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70%
Conversion, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Cut sets transferred in, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Cost data:
Total cost of beginning inventory on May 1 . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,800
Direct materials costs incurred in May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Conversion costs incurred in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,200
Physical units data:
Units in process, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 sets
Units started in May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 sets
Units in process, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 sets
Percentage of completion data:
Direct materials, May 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Conversion, May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Direct materials, May 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
Conversion, May 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
a. Prepare a schedule showing: (1) the number of mat sets transferred from the Cutting Department
to the Coating Department in May, and (2) the number of mat sets started and completed
by the Cutting Department in May.
b. Compute the equivalent units of input resources for the Cutting Department in May.
c. Compute the cost per equivalent unit of input resource for the Cutting Department in May.
d. Prepare the summary journal entry required to transfer the cost of completed mat sets from the
Cutting Department to the Coating Department in May.
e. Compute the total cost assigned to the Cutting Department’s ending inventory on

Answer 1

FIFO method
Beggining units	8000	Transferred out	48,000
Started into production	50000	Ending units	10,000
	58000		58000
Equivalent units	Material	Conversion
Beginning units	8000	8000
Completion in current period	0%	20%
A	0	1600
Units started and completed	40000	40000
Completion	100%	100%
B	40000	40000
Ending Units	10,000	10,000
Completion	100%	20%
C	10000	2000
Total units A+B+C	50000	43600
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	200000	50000	4.00
Conversion cost	87200	43600	2.00
Total	287200		6.00

Beginning work in progress A			44800
Beginning inventory completed
Completion	0%	20%
Per unit cost	4.00	2.00
Units	8000	8000
Total cost   B	0	3200	3200
Units started and completed
Completion	100%	100%
Per unit cost	4.00	2.00
Units	40000	40000
Total cost    C	160000	80000	240000
Total cost A+B+C	160000	83200	288000
Ending work in progress
Completion	100%	20%
Per unit cost	4.00	2.00
Units	10,000	10,000
Total cost	40000	4000	44000
	Total cost accounted for		332000
			287200