Question

Marine Supply Company manufactures boat products. Its products move through two departments: development and packaging. Production and cost data for the packaging department are as follows:

Work in process inventory, March 1 (16,000 units)
Costs transferred in	$ 18,480
Materials cost	5,440
Conversion costs (30% complete)	3,584
Costs incurred in March
Transferred in (200,000 units)	$150,000
Materials cost	68,000
Conversion costs	112,000

All materials are added at the beginning of the packaging process. Ending inventory consists of 24,000 units, 100% complete as to materials and 60% complete as to conversion.

Prepare a production cost report for the packaging department for March. Use the average cost method.

Answer 1

• All elements of Production Cost report have been calculated below

Reconciliation of Units
A	Opening WIP	16,000
B	Introduced	200,000
C=A+B	TOTAL	216,000
D	Transferred	192,000
E=C-D	Closing WIP	24,000

Statement of Equivalent Units
		Cost Transferred		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	192,000	100%	192,000.0	100%	192,000.0	100%	192,000.0
Closing WIP	24,000	100%	24,000.0	100%	24,000.0	60%	14,400.0
Total	216,000	Total	216,000.0	Total	216,000.0	Total	206,400.0

Cost per Equivalent Units
COST	Cost Transferred	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$             18,480.00	$             5,440.00	$                3,584.00	$            27,504.00
Cost incurred during period	$          150,000.00	$          68,000.00	$            112,000.00	$          330,000.00
Total Cost to be accounted for	$          168,480.00	$          73,440.00	$            115,584.00	$          357,504.00
Total Equivalent Units	216,000	216,000	206,400
Cost per Equivalent Units	$                   0.7800	$                0.3400	$                    0.5600	$                  1.6800

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Cost Transferred	$                       0.78	24,000	$              18,720.00	192,000	$          149,760.00
Material	$                       0.34	24,000	$                8,160.00	192,000	$            65,280.00
Conversion Cost	$                       0.56	14,400	$                8,064.00	192,000	$          107,520.00
TOTAL		TOTAL	$              34,944.00	TOTAL	$          322,560.00