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
Production Cost report
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	500
Started into Production	2000
Total units to account for	2500
Units accounted for:
Unit completed & Transferred out	1700	1700	1700
Units in ending inventory:	800
Material (100%)		800
Conversion (40%)			320
Equivalent units of production	2500	2500	2020

Solution a2:

Swinn Company Computation of Cost per equivalent unit
Particulars	Material	Conversion	Total
Opening WIP	$15,000	$18,000	$33,000
Cost Added during Period	$50,000	$52,700	$102,700
Total cost to be accounted for	$65,000	$70,700	$135,700
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:

Cost reconciliation - Swinn Company
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$33,000.00
Cost added to production	$102,700.00
Total Costs to be accounted for	$135,700.00
Costs accounted for as follows:
Cost of unit transferred out	$103,700
Ending WIP:
Material	$20,800
Converison	$11,200
Total Ending WIP	$32,000
Total costs accounted for	$135,700