Question

Galaxy Manufacturing Company makes golf balls to be distributed and sold at local golf clubs. The golf balls have special features that increase distance and speed at the driving range. The company uses a process costing system to accumulate product costs as the golf balls move through the two stages of production: molding the rubber into cases and stamping. All materials are added at the beginning of both molding and stamping processes, while conversion costs are applied evenly throughout the process.

​At the beginning of September, the Molding Department had 1,000 golf balls in process that were 50% complete. The company had incurred $1,300 in direct materials cost and $1,250 in conversion cost to make them. During the month, the department added $13,195 more of direct materials and $32,875 in conversion costs. A total of 9,150 golf balls were finished during September and transferred to the Stamping Department. At the end of the month, 2,000 golf balls that were 30% complete remained in the Molding Department.

Timmy Woods, the CFO of Galaxy Manufacturing Company, needs the following calculations:

a) Calculate the number of golf balls started in the Molding Department during September.

b) Calculate the equivalent units of production for the Molding Department during September. (Hint: Materials equivalent units and conversion equivalent units will not be the same.)

c) What was the ending balance in the Molding Department’s Work in Process Inventory account in dollars?

d) How much cost was transferred from the Molding Department to the Stamping department during September?

e) Reconcile both the physical units and the product costs for the Molding Department in September.

Answer 1

a) Calculate the number of golf balls started in the Molding Department during September.

units started= ending wip units + completed units - beginning units

=2000+9150-1000=10150

b) Calculate the equivalent units of production for the Molding Department during September. (Hint: Materials equivalent units and conversion equivalent units will not be the same.)

Equivalent units of production (EUP)­ weighted average method
	Units	% Materials	EUP­ Materials	% Conversion	Conversion
Units completed and transferred out	9150	100.00%	9150	100.00%	9150
Ending goods in process ­ units	2000	100.00%	2000	30%	600
Equivalent Unit of Production	11150		11150		9750

c) What was the ending balance in the Molding Department’s Work in Process Inventory account in dollars?

Cost Per Equivalent unit of Production			Direct Material		Conversion
Costs of beginning goods in process			1300		1250
Costs incurred this period			13195		32875
Total Costs		Costs	14495	Costs	34125
Equivalent Unit of Production			11150		9750
Cost Per Equivalent unit of Production			1.30		3.50
Total costs accounted for
Cost of Units Transferred out	EUP	Cost Per EUP	Total Cost
Direct Material	9150	1.30	11,895.00
Conversion	9150	3.50	32,025.00
Total Cost Transferred out			43,920.00
Cost of Ending Work in Progress	EUP	Cost Per EUP	Total Cost
Direct Material	2000	1.30	2,600.00
Conversion	600	3.50	2,100.00
Total Cost of Ending Work in Progress			4,700.00
Total Cost Assigned			48620

d) How much cost was transferred from the Molding Department to the Stamping department during September?

Total Cost Transferred out

43,920.00

e) Reconcile both the physical units and the product costs for the Molding Department in September.

Units to account for:
Beginning goods in process inventory ­ units	1000
Units started this period	10150
Total units to account for	11150
Total units accounted for:
Units completed and transferred out	9150
Ending goods in process ­ units	2000
Total units accounted for	11150
Total costs accounted for
Costs of beginning goods in process	2550
Costs incurred this period	46070
Total costs to account for:	48620
Total costs accounted for
Total Cost Transferred out	43,920.00
Total Cost of Ending Work in Progress	4,700.00
Total costs to account for:	48620