Question

Nevada Manufacturing Corporation produces its product by passing it through a single processing department. Direct materials, direct labor, and manufacturing overhead are added evenly throughout the process. The company uses monthly reporting for its process accounting system. The Work in Process Inventory T account is attached after posting entries for direct materials, direct labor, and manufacturing overhead costs for the month of April. Of the balance in beginning WIP inventory, 20% was for direct materials and the remainder was for conversion costs. During April, the company finished and transferred 100,000 units of the product to finished goods. Of these, 20,000 were in process at the beginning of the month and 80,000 were started and completed during the month. The beginning work in process inventory was 40% complete. At the end of the month, the work in process inventory consisted of 15,000 units that were 70% complete. REQUIRED: Using the FIFO process costing method, prepare the provided schedules for the month of April. Round all costs per equivalent unit to five decimal places and all other dollar amounts to the nearest whole dollar. (a) Schedule of Equivalent Units. (b) Unit Cost Analysis Schedule. (c) Cost Summary Schedule. Work in Process Inventory Beginning Balance 27,200 Direct Materials 61,500 Direct Labor 205,000 MOH Applied 82,000 Ending Balance 375,700

Answer 1

Nevada Manufacturing Corporation
Processing Department production Report
First in First out (FIFO) Method
Month ended April 30
Summary of Physical units
Units in beginning WIP inventory			20,000
Units started during month (80000+15000)			95000
Total unit to be accounted for			115000
Units completed and transferred out			100,000
Units in ending WIP inventory			15,000
Total unit accounted for			115000
Equivalent Units of production
Particulars	Physical units	Direct material	Conversion Cost
%	units	%	units
units in beginning WIP inventory	20000	60%	12000	60%	12000
Units in Started and completed (100000-20000)	80000	100%	80000	100%	80000
units in ending WIP inventory	15000	70%	10500	70%	10500
Equivalent Units of production			102500		102500
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP (27200*20%) (27200*80%)	5,440	21,760	27,200
Cost incurred during Month (205000+82000)	61,500	287,000	348,500
total cost to be accounted for	66,940	308,760	375,700
cost per Equivalent Unit
Cost incurred during Month	61500	287000
Equivalent Units of production	102500	102500
Cost per Equivalent Unit	$              0.60	$            2.80	$            3.40
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
Direct material	5440
Conversion Cost	21760
Cost in beginning WIP		27,200
Direct material (12000*0.6)	7200
Conversion Cost (12000*2.8)	33600
Cost incurred for complete beginning WIP		40,800
Direct material (80000*0.6)	48000
Conversion Cost (80000*2.8)	224000
Cost of units in Started and completed		272,000
cost assigned to units transferred out		340,000
cost assigned to units ending work in progress
Direct material (10500*0.6)	6300
Conversion Cost (10500*2.8)	29400
cost assigned to units ending work in progress		35,700
Total cost assigned		375,700

For direct material 40% unit completed in the previous period. It means the remaining 60% completed in this month.

For conversion cost 40% unit completed in the previous period. It means the remaining 60% completed in this month.