Question

Kansas Supplies is a manufacturer of plastic parts that uses the weighted-average process costing method to account for costs of production. It produces parts in three separate departments: Molding, Assembling, and Packaging. The following information was obtained for the Assembling Department for the month of April.

Work in process on April 1 had 107,000 units made up of the following:

	Amount			Degree of Completion
Prior department costs transferred in from the Molding Department	$	145,520			100	%
Costs added by the Assembling Department
Direct materials	$	96,300			100	%
Direct labor		36,169			70	%
Manufacturing overhead		19,012			50	%
	$	151,481
Work in process, April 1	$	297,001

During April, 507,000 units were transferred in from the Molding Department at a cost of $689,520. The Assembling Department added the following costs:

Direct materials	$	437,670
Direct labor		164,241
Manufacturing overhead		74,808
Total costs added	$	676,719

Assembling finished 407,000 units and transferred them to the Packaging Department.

At April 30, 207,000 units were still in work-in-process inventory. The degree of completion of work-in-process inventory at April 30 was as follows:

Direct materials	90	%
Direct labor	80
Manufacturing overhead	30

Required:

a. Prepare a production cost report using FIFO. (Round "Cost per equivalent unit" to 2 decimal places.)

Answer 1

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4	Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For Direct material 100% unit completed in the previous period. It means the remaining 0% completed in this month.
For Direct labor 70% unit completed in the previous period. It means the remaining 30% completed in this month.
For Overhead 50% unit completed in the previous period. It means the remaining 50% completed in this month.

Kansas Supplies
Assembly Department production Report
First in First out (FIFO) Method
Month ended April 30
Summary of Physical units
Units in beginning WIP inventory			107,000
Units started during month			507,000
Total unit to be accounted for			614,000
Units completed and transferred out			407,000
Units in ending WIP inventory			207,000
Total unit accounted for			614,000
Equivalent Units of production
Particulars	Physical units	Transferred in		Direct material		Direct labor		overhead
		%	units	%	units	%	units	%	units
units in beginning WIP inventory	107000	0%	0	0%	0	30%	32100	50%	53500
Units in Started and completed (407000-107000)	300000	100%	300000	100%	300000	100%	300000	100%	300000
units in ending WIP inventory	207000	100%	207000	90%	186300	80%	165600	30%	62100
Equivalent Units of production			507,000		486,300		497,700		415,600
Summary of cost to be accounted
	Transferred in	Direct material	Direct labor	overhead	Total
Cost in beginning WIP	$        145,520	$              96,300	$          36,169	$        19,012	$            297,001
Cost incurred during Month (Add)	$        689,520	$            437,670	$        164,241	$        74,808	$        1,366,239
total cost to be accounted for	$        835,040	$            533,970	$        200,410	$        93,820	$        1,663,240
cost per Equivalent Unit
Cost incurred during Month	$        689,520	$            437,670	$        164,241	$        74,808
Equivalent Units of production	507,000	486,300	497,700	415,600
Cost per Equivalent Unit	$               1.36	$                   0.90	$               0.33	$             0.18	$                   2.77
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
Transferred in	$        145,520
Direct material	$          96,300
Direct labor	$          36,169
overhead	$          19,012
Cost in beginning WIP		$            297,001
Transferred in (0*1.36)	$                    -
Direct material (0*0.9)	$                    -
Direct labor (32100*0.33)	$          10,593
overhead (53500*0.18)	$             9,630
Cost incurred for complete beginning WIP		$              20,223
Transferred in (300000*1.36)	$        408,000
Direct material (300000*0.9)	$        270,000
Direct labor (300000*0.33)	$          99,000
overhead (300000*0.18)	$          54,000
Cost of units in Started and completed		$            831,000
cost assigned to units transferred out		$        1,148,224
cost assigned to units ending work in progress
Transferred in (207000*1.36)	$        281,520
Direct material (186300*0.9)	$        167,670
Direct labor (165600*0.33)	$          54,648
overhead (62100*0.18)	$          11,178
cost assigned to units ending work in progress		$            515,016
Total cost assigned		$        1,663,240