Question

Ronlon Parts, Inc., manufactures bumpers (plastic or metal, depending on the plant) for automobiles. Each bumper passes through three processes: Molding, Drilling, and Painting. In August, the Molding Department of the Oklahoma City plant reported the following data:

a. In Molding, all direct materias are added at the beginning of the process.

b. Beginning work in process consisted of 9,000 units, 20 percent complete with respect ot direct labor and overhead. Costs in the beginning inventory included direct materials, $270,000; conversion costs, $82,800

c. Costs added to the productiong during the month were direct materials, $570,000; and conversion costs, $1,304,700

d. At the end of the month, 27,000 units were transferred out to Drilling, leaving 3,000 units in ending work in process, 25 percent complete.

REQUIRED:

1. Prepare a physical flow schedule.

2. Calculate equivalent units of production for direct materials and conversion costs.

3. Compute unit cost.

4. Calculate the cost of goods transferred to Drilling at the end of the month. Calculate the cost of ending inventory.

5. Prepare the journal entry that transfers the goods from Molding to Drilling.

Answer 1

1.

Ronlon Parts, Inc.
Physical Flow Schedule
Units to account for:
Units in beginning work in process	9000
Units started	21000
Total units to account for	30000
Units accounted for:
Units completed	27000
Ending work in process	3000
Total units accounted for	30000

2.

Schedule of Equivalent Units
		Equivalent Units
	Units	Direct Materials		Conversion Costs
Units completed	27000	100%	27000	100%	27000
Units in ending work in process	3000	100%	3000	25%	750
Total equivalent units			30000		27750

3.

	Direct Materials	Conversion Costs
Beginning WIP	270000	82800
Costs added during the month	570000	1304700
Total costs $	840000	1387500	2227500
Total equivalent units	30000	27750
Unit cost $	28.00	50.00	78.00

4. Cost of goods transferred to Drilling = 27000 x $78 = $2106000

Cost of ending inventory = (3000 x $28) + (750 x $50) = $84000 + $37500 = $121500

5.

Account Titles and Explanation	Debit	Credit
Work in process-Drilling	2106000
Work in process-Molding		2106000
(To record transfer from Molding to Drilling)