Question

Question 1) Chomp Pet Foods manufactures canned dog food. The firm employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. In the month of June, the company had 4000 units in beginning work in process that were 60% complete. During June, 7000 units were started and 7600 units were completed and transferred out. At the end of June, there were 3400 units in ending work in process that were 20% complete.

Ans: 7,000

The answer is 7,000. Can you please explain why this is and show working out. Thanks!

Answer 1

Notes:

1) Material is added at beginning of the process so, all material in the beginning work in progress is 100% complete in terms of material, and 60% complete in terms of conversion. So in current month no material is required for 4000 units and remaining 40% in terms of conversion is added for 4000 units.

2) Units started and transfered(3600 units) out is subject to 100% material and conversion cost in June.

3) Ending inventory(3400 units) will be 100% complete in terms of material as material is added at beginning of process and 20% complete in terms of conversion cost.

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