Question

Choco Nibbles produces low calorie chocolate snacks. The Baking Department has the following production and manufacturing cost data for January.

Production: Beginning inventory has 2,200 boxes of Nibbles that are 100% complete as to materials and 30% complete as to conversion costs. A total of 38,000 boxes were started into production. Ending inventory of 3,500 boxes are 40% complete as to conversion costs.

Manufacturing Costs: Beginning work in process inventory was $7,845, comprised of $3,160 of materials and $4,685 of conversion costs. Materials added during the month were $29,000, with labor and overhead applied during the month totaling $19,000 and $16,320, respectively.

Instructions (a) Compute the equivalent units of production for materials and conversion costs for the month of January.

(b) Compute the unit costs for materials and conversion costs.

(c) Determine the costs to be assigned to the units transferred out and ending work in process

Answer 1

a)Weighted average method of process costing

Units completed and transfered out =Beginning WIP +started -ending WIP

      = 2200+38000-3500

         = 36700

	Material	conversion cost
Units completed and transfered out	36700	36700
Ending WIP	3500	1400    [3500*40%]
Equivalent unit	40200	38100

b)

	Material	conversion
Beginning WIP	3160	4685
COst incurred during the period	29000	19000+16320=35320
Total cost incurred [A]	32160	40005
Number of equivalent unit [B]	40200	38100
unit cost [A/B]	$ .80	1.05

C)Cost of unit transfered out = [equivalent unit for material *unit cost for material ]+[equivalent unit for conversion * unit cost for conversion]

   =[36700*.80]+[36700*1.05]

    = 29360+ 38535

   = 67895

cost of ending WIP = [3500*.80]+[1400*1.05]

       = 2800+ 1470

        = 4270