Question

Q-2) The smelting department of Company X has following production and cost data for September:

Production: Beginning work in process 200 units that are 100% complete as to materials and 85% complete as to conversion costs; units started into production 1,000 units; units transferred out to next department 900 units; ending work in process 300 units that are 100% complete as to materials and 46% complete as to conversion costs.

Manufacturing costs: Beginning work in process TL8,600 materials, TL9,230 labor and TL2,600 manu- facturing overhead costs. In current period, TL50,500 worth of materials, TL25,300 worth of labor and TL35,000 worth of manufacturing overhead costs are incurred.

(a) (20 points) Assuming Company X uses WA method to compute equivalent units: i. Summarize the flow of physical units

ii. Compute output in terms of equivalent units
iii. Compute total and unit costs
iv. Prepare a cost reconciliation schedule and assign costs to transferred out and ending inventory

(b) (20 points) Assuming Company X uses FIFO method to compute equivalent units: i. Summarize the flow of physical units

ii. Compute output in terms of equivalent units
iii. Compute total and unit costs
iv. Prepare a cost reconciliation schedule and assign costs to transferred out and ending inventory

(c) (10 points) Compare the value of transferred out and ending inventory for WA method in Part (a) to the value of transferred out and ending inventory for FIFO method in Part (b). Are they equal? Why/Why not?

(d) (10 points) Compute unit material and conversion costs for both the beginning inventory and current period. Does this information support your argument in Part (c)? Explain.

Answer 1