Question

The following information is for Douglas Manufacturing Company for the month of May. All materials are added at the beginning of the production process.

Beginning Inventory

2,350 units, 40% complete

Direct Materials          $7,200

Conversion                  $1,100

Current Month’s Data

10,120 units started

Direct Materials          $51,612

Conversion                  $53,904

Ending Inventory

1,000 units, 70% complete

Compute equivalent units of production.

Compute unit costs.

            c.         Compute the cost of transferred production.

d.         Compute the cost of ending work in process being sure to show how much of the cost is materials and how much of the cost is conversion.

Now assume that the 10,120 units that were started had $101,200 of costs already attached to them from another department. How would this change your answer to parts c and d? Show the computation for each.

Answer 1

FIFO method
Beggining units	2350	Transferred out	11,470
Started into production	10120	Ending units	1,000
	12470		12470
Equivalent units	Material	Conversion
Beginning units	2350	2350
Completion in current period	0%	60%
A	0	1410
Units started and completed	9120	9120
Completion	100%	100%
B	9120	9120
Ending Units	1,000	1,000
Completion	100%	70%
C	1000	700
Total units A+B+C	10120	11230
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	51612	10120	5.10
Conversion cost	53904	11230	4.80
Total	105516		9.90

	Cost of goods sold	Material	convertion cost
	Beginning inventory completed
	Completion	0%	60%
	Per unit cost	5.10	4.80
	Units	2350	2350
	Total cost   A	0.00	6768	6768
	Units started and completed
	Completion	100%	100%
	Per unit cost	5.10	4.80
	Units	9120	9120
	Total cost    B	46512	43776	90288
	Beginning work in progress C	7200	1100	8300
	Total cost A+B+C			105356
	Ending work in progress
	Completion	100%	70%
	Per unit cost	5.10	4.80
	Units	1,000	1,000
	Total cost	5100	3360	8460
		Total cost accounted for		113816