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25) A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000...

25) A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000 units, 75% complete with respect to direct labor and overhead. The value of beginning inventory was $275,000 which consisted of $190,000 of conversion costs and $85,000 of direct material costs. The department completed and transferred out 127,500 units this period. The ending inventory consists of 20,000 units that are 25% complete with respect to conversion costs (direct labor and overhead). All direct materials are added at the beginning of the process. The department incurred direct labor costs of $24,000 and overhead costs of $32,000 for the period. The conversion cost per equivalent unit for the month is (rounded to the nearest cent):

26) K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours?

27) A manufacturing company's Work-in-Process inventory on January 1 was $68,000; during the year it used $37,000 of direct material costs, incurred $53,000 of direct labor costs, and applied $57,000 of overhead costs; the December 31 Work-in-Process inventory was $77,000. What was the cost of goods manufactured for that year?

Solutions

Expert Solution

(partial) for conversion costs only % of completion Equivalent units
25.. Units DM Conv. DM Conv.
Beginning WIP 30000
Started(Bal.fig.) 117500
Total units to a/c for 147500
Compl. & trfd. 127500 100% 100% 127500 127500
Ending inventory 20000 100% 25% 20000 5000
Total a/cd. For 147500 147500 132500
Costs :
Beginning WIP 85000 190000
Costs added 56000
Costs to a/c for---a 246000
Eq. units from above---b 147500 132500
Cost/Eq. unit (a/b) 1.8566
Costs assigned to :
Compl. & trfd. 236717
Ending inventory 9283
Total a/cd. For 246000
So, from the above (partial cost of production report)
The conversion cost per equivalent unit for the month is
$1.86
($ 246000/132500 eq. units)
26..Predetermined OH rate=Estimated OH costs/Estimated direct labor hrs.
ie. (2900000+800000)/80000=
46.25
per DL hr.
So,
OH that would be assigned to a product requiring 4 direct labor hours=
$ 46.25*4 hrs.
185
27..Schedule of cost of goods manufactured
Work-in-Process inventory,Jan 1 68000
Add: Costs incurred during the year
          Direct materials 37000
            Direct labor 53000
            MOH applied 57000
Total manufacturing costs for the year 215000
Less: Work-in-Process inventory,Dec 31 -77000
Cost of goods manufactured for the year 138000

ekkarill92 answered 1 year ago
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