Question

Process Costing – Packaging Department

Direct materials are added 90% at the beginning of the process and the remaining 10% are added when the cereal is 50% complete with the packaging process. Direct labor and overhead are added evenly throughout the process.

Table 8 – Unit and cost information

		Cost
	Physical Units	Transferred-in	Direct Materials	Direct Labor	Overhead
Beg WIP	4,000 (40% complete)	$14,300	$720	$347.48	$140
Transferred In	43,964	$170,361.40
End WIP	5,000 (30% complete)

Added during Qtr 1:

Direct Materials -- $14,943.12

Direct Labor – 910 hrs @ $11.00 per hour

Overhead – OH is applied based on predetermined OH rate and actual DL hours

1. Determine the number of units completed during quarter 1.

4,000+42,964= ? + 5000

42,964 units were completed

2. Compute the equivalent units using the weighted average method

3. Compute the cost per equivalent unit using the weighted average method

4. Compute the cost of goods transferred to finished goods inventory

5. Compute the ending balance in WIP, Packaging

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units		4,000.00
Add: Units Started in Process		43,964.00
Total Units to account for:		47,964.00
UNITS TO BE ACCOUNTED FOR:
Units completed and transferred out	42,964.00
Ending Work in Process		5,000.00
Total Units to be accounted for:	47,964.00
Equivalent Units:
			Transferred in Cost	Material Cost	Conversion Cost
			% Completion	Units	% Completion	Units	% Completion	Units
units completed		100%	42,964.00	100%	42,964.00	100%	42,964.00
Ending Work in Process	100%	5,000.00	90%	4,500.00	30%	1,500.00
Total Equivalent units		47,964.00		47,464.00		44,464.00
TOTAL COST TO ACCOUNT FOR:
			Transferred-in		Material		Conversion
Beginning work in Process	14,300.00		720.00		487.48	(347.48+140)
Cost Added during May	1,70,361.40		14943.12		14,043.03	(910*11+40.29%)
Total Cost to account for:	1,84,661.40		15663.12		14,530.51
Total Cost to account for:					2,14,855.03
COST PER EQUIVALENT UNIT:
			Transferred-in		Material		Conversion
Cost added during the period	184661.40		15663.12		14530.51
Equivalent Units		47964.00		47464.00		44464.00
Cost per Equivalent unit	3.85		0.33		0.33
TOTAL COST ACCOUNTED FOR:
Units Completed and Transferred out (42964 units)
			Equivalent unit	Cost per EU	Total Cost
Transferred-in cost		42,964	3.85	165411.4
Material cost		42,964	0.33	14178.12
Conversion Cost		42,964	0.33	14178.12
Total Cost of Units completed and transferred out:	193767.6
Ending Work in Process (5000 units)
			Equivalent unit		Total Cost
Transferred-in cost		5,000.00	3.85	19250
Material cost		4,500.00	0.33	1485
Conversion Cost		1,500.00	0.33	495
Total cost of Ending Work in process:		21,230
Total Cost accounted for:			2,14,998