Question

Swinn Company manufactures bicycles. Materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Production and cost data for the month of May are as follows. Percent Production Data—Bicycles Units Complete Work in process units, May 1 500 80% Units started in production 2,000 Work in process units, May 31 800 40% Cost Data—Bicycles Work in process, May 1 Materials $15,000 Conversion costs 18,000 $33,000 Direct materials 50,000 Direct labor 19,020 Manufacturing overhead 33,680 Instructions (a) Calculate the following. (1) The equivalent units of production for materials and conversion. (2) The unit costs of production for materials and conversion costs. (3) The assignment of costs to units transferred out and in process at the end of the accounting period. (b) Prepare a production cost report for the month of May for the bicycles

Answer 1

Solution a1:

Swinn Company Computatio of Equivalent units
Particulars	Physical Units	Equivalent units
		Material	Conversion
Work in Process, beginning	500
Started during the current period	2000
Total units to account for	2500
Units accounted for:
Unit completed & Transferred out	1700	1700	1700
Closing WIP:	800
Material (100%)		800
Conversion (40%)			320
Equivalent units of production	2500	2500	2020

Solution a2:

Swinn Company Computation of Cost per equivalent unit of Production
Particulars	Material	Conversion
Opening WIP	$15,000.00	$18,000.00
Cost Added during Period	$50,000.00	$52,700.00
Total cost to be accounted for	$65,000.00	$70,700.00
Equivalent units of production	2500	2020
Cost per Equivalent unit	$26.00	$35.00

Solution a3:

Swinn Company Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	800	320
Cost per equivalent unit	$26.00	$35.00
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$20,800	$11,200	$32,000
Units completed and transferred	1700	1700
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$44,200	$59,500	$103,700

Solution b:

Swinn Company Production cost report
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$33,000.00
Cost added to production	$102,700.00
Total Cost to be accounted for	$135,700.00
Costs accounted for as follows:
Cost of unit transferred out	$103,700
Ending WIP	$32,000
Total cost accounted for	$135,700.00