Question

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. There were 15,000 chairs in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:

      Direct materials                   $24,000

      Conversion costs                  $35,000

Manufacturing costs added during the accounting period:

      Direct materials                  $168,000

      Conversion costs                 $278,000

21) How many of the units that were started and completed during February?

22) What were the equivalent units for conversion costs during February?

A) 81,500

B) 83,000

C) 73,000

D) 77,500

23) What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February?

24) What is the cost of the goods transferred out during February?

Answer 1

Answer-

21	Calculation of the equivalent units for conversion costs during February
	Sr No	Particulars	Units
	A	Beginning inventory of Chairs in WIP	15,000
	B	Completed as to conversion costs in previous month	30%
	C	Completed as to conversion costs in current month (Feb) [100%-B]	70%
	D	Beginning Inventory completed during Feb [C*A]	10,500
	E	No. of Chairs completed During the Feb	78,000
	F	100% completed chair during the Feb [E-A]	63,000
	G	Chairs in ending inventory	10,000
	H	Ending work in process related to Conversion Cost	80%
	I	Completed as to conversion costs in current month (Feb) [G*H]	8,000
22	J	The equivalent units for conversion costs during February [D+F+I]	81,500
23	Calculation the amount of direct materials cost assigned to ending WIP inventory
	Sr No	Particulars	Units
	A	Beginning inventory of Chairs in WIP	15,000
	B	Completed as to material costs in previous month	100%
	C	Completed as to material costs in current month (Feb) [100%-B]	0%
	D	Beginning Inventory completed during Feb [C*A]	-
	E	No. of Chairs completed During the Feb	78,000
	F	100% completed chair during the Feb [E-A]	63,000
	G	Chairs in ending inventory	10,000
	H	Ending work in process related to Material Cost	100%
	I	Completed as to Material costs in current month (Feb) [G*H]	10,000
	J	The equivalent units for Direct material costs during February [D+F+I]	73,000
	K	Total Direct materials Cost	168,000
	L	Direct materials Cost Per Unit [K/J]	2.30
	M	Direct materials cost assigned to ending WIP inventory [I*L]	23,000

24-Cost per Equivalent Units AND Cost to be accounted for
	Materials		Conversion Cost		TOTAL
Cost incurred in Current Period	$                         1,68,000.00		$                         2,78,000.00		$          4,46,000.00
Total Equivalent Units	$                            73,000.00		$                            81,500.00
Cost per Equivalent Units	$                                       2.30		$                                       3.41
Cost of Beginning WIP	$                            24,000.00		$                            35,000.00		$             59,000.00
Total cost to be accounted for					$          5,05,000.00

STEP 4
Cost report [Including Reconciliation]
	Cost of	Units Transferred		78,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Materials	-	$        2.30	$                     -
	Conversion costs	10,500	$        3.41	$      35,805.00	$             35,805.00
B	From units started & completed
	Materials	63,000	$        2.30	$ 1,44,900.00
	Conversion Costs	63,000	$        3.41	$ 2,14,830.00	$          3,59,730.00
C=A+B	Total				$          3,95,535.00
D	Cost of Beginning WIP				$             59,000.00
E=C+D	Total Cost of Units transferred				$          4,54,535.00
	Cost of	Ending WIP		10,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Materials	10,000	$        2.30	$      23,000.00
G	Conversion Costs	8,000	$        3.41	$      27,280.00
H = F + G	Total Cost of Ending WIP				$             50,280.00
I = E + H	Total Cost accounted for				$          5,04,815.00
J	Rounding Off Differences				$                   185.00
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$505,000