Question

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS BELOW:

The Tokiwa chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 75,000 chairs. During the month, the firm completed 82,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 3,000 chairs in ending inventory at the Assembly Department. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The beginning work in process was 20% completed as to conversion costs, while the ending work in process was 70% completed as to conversion costs. Using two methods to answer to the questions below.

         Beginning inventory:

                  Direct materials               $31,750

                  Conversion costs           $100, 450

         Manufacturing costs added during the accounting period:

                  Direct materials             $168,000

                  Conversion costs            $278,000

Answers with the weighted average method

W1.  What were the equivalent units for direct materials and conversion costs during February?

units tran

W2.  What are the costs per equivalent unit for direct material and conversion costs?

W3. What are the dollar values of direct materials and conversion costs assigned to the ending work-in-process inventory in February?

W4.     What is the cost of the goods transferred out from Assembly Department to Finish Department during February?

Answers with the FIFO method (keep four decimal places)

F1.    What were the equivalent units for direct materials and conversion costs during February?

F2.    What are the costs per equivalent unit for direct material and conversion costs

F3.  What are the dollar value of direct materials and conversion costs assigned to the ending work-in-process inventory in February?

F4        What is the cost of the goods transferred out from Assembly Department to Finish Department during February?

Answer 1

Weighted Average

	Physcial units	Materials	Conversion
Work in Process Beginning	10000
Started during the period	75000
To account for	85000
Units transferred to finished goods	82000	82000	82000
Work in Process Ending	3000	3000	2100
Accounted for	85000
Equivalent units		85000	84100
	Materials	Conversion	Total
Cost of Beginning Work in Process	$            31,750	$         1,00,450	$         1,32,200
Cost added during the period	$         1,68,000	$         2,78,000	$         4,46,000
Total Cost	$         1,99,750	$         3,78,450	$         5,78,200
Equivalent units of Production	85000	84100
Cost per equivalent unit	$                 2.35	$                 4.50	$                 6.85
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	3000	2100
Cost per equivalent unit	$                 2.35	$                 4.50
Cost of Ending work in Process Inventory	$              7,050	$              9,450	$            16,500
Units Completed and transferred out
Units transferred to next department	82000	82000
Cost per equivalent unit	$                 2.35	$                 4.50
Cost of units transferred out	$         1,92,700	$         3,69,000	$         5,61,700

FIFO

	Physcial units	Materials	Conversion
Work in Process Beginning	10000
Started during the period	75000
To account for	85000
Work in Process Beginning	10000	0	8000
Units started and completed	72000	72000	72000
Units transferred to next department	82000	72000	80000
Ending Work in Process :	3000	3000	2100
Accounted for	85000
Equivalent units		75000	82100
	Materials	Conversion	Total
Cost added during the period	$         1,68,000	$         2,78,000	$         4,46,000
Equivalent units of Production	75000	82100
Cost per equivalent unit	$                 2.24	$                 3.39	$                 5.63
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	3000	2100
Cost per equivalent unit	$                 2.24	$                 3.39
Cost of Ending work in Process Inventory	$              6,720	$              7,111	$            13,831
	Materials	Conversion	Total
Units Completed and transferred out
Cost of Beginning Work in Process	$            31,750	$         1,00,450	$         1,32,200
Cost of work on Beginning Work in Process	$                     -	$            27,089	$            27,089
Total Cost of Beginning WIP	$            31,750	$         1,27,539	$         1,59,289
Units started and completed	72000	72000
Cost per equivalent unit	$                 2.24	$                 3.39
Cost of units started and completed	$         1,61,280	$         2,43,800	$         4,05,080
Cost of units transferred out	$         1,93,030	$         3,71,339	$         5,64,369

Answers are marked in bold