Question

Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.

Work in process, June 1—60,000 units:
Direct material: 100% complete, cost of	$	292,500
Conversion: 40% complete, cost of		159,200
Balance in work in process, June 1	$	451,700
Units started during June		240,000
Units completed during June and transferred out to finished-goods inventory		190,000
Work in process, June 30:
Direct material: 100% complete
Conversion: 60% complete
Costs incurred during June:
Direct material	$	487,500
Conversion costs:
Direct labor	$	81,800
Applied manufacturing overhead		245,400
Total conversion costs	$	327,200

Required:

Prepare schedules to accomplish each of the following process-costing steps for the month of June. Use the weighted-average method of process costing.

1. Analysis of physical flow of units.

2. Calculation of equivalent units.

3. Computation of unit costs.

4. Analysis of total costs.

Answer 1

Requirement 1

Reconciliation of Units
A	Opening WIP	60,000
B	Introduced	2,40,000
C=A+B	TOTAL	3,00,000
D	Transferred	1,90,000
E=C-D	Closing WIP	1,10,000

Requirement 2—Equivalent units

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,90,000	100%	1,90,000	100%	1,90,000
Closing WIP	1,10,000	100%	1,10,000	60%	66,000
Total	3,00,000	Total	3,00,000	Total	2,56,000

	Material	Conversion
Equivalent Units of Production	3,00,000	2,56,000

Requirement 3---Cost per Equivalent unit

Cost per Equivalent Units
COST		Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost		$        2,92,500	$   1,59,200	$ 4,51,700
Cost incurred during period		$         4,87,500	$   3,27,200	$ 8,14,700
Total Cost to be accounted for		$         7,80,000	$   4,86,400	$ 12,66,400
Total Equivalent Units		3,00,000	2,56,000
Cost per Equivalent Units		$                 2.60	$           1.90

	Material	Conversion
Cost per equivalent Unit	$ 2.60	$ 1.90

Requirement 4—Analysis of Total Cost

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$    2.60	1,10,000	$   2,86,000.00	1,90,000	$    4,94,000.00
Conversion Cost	$    1.90	66,000	$   1,25,400.00	1,90,000	$    3,61,000.00
		TOTAL	$         4,11,400	TOTAL	$         8,55,000

Reconciliation and Cost report
Cost to be accounted for
Beginning Work In Progress:
Material	$     2,92,500.00
Conversion Cost	$     1,59,200.00	$ 4,51,700.00
Cost incurred during period:
Material	$     4,87,500.00
Conversion Cost	$     3,27,200.00	$ 8,14,700.00
Total Cost to be accounted for				$      12,66,400.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	1,90,000	$                 2.60	$   4,94,000.00
Conversion Cost	1,90,000	$                 1.90	$   3,61,000.00
				$         8,55,000.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	1,10,000	$                 2.60	$ 2,86,000.00
Conversion Cost	66,000	$                 1.90	$   1,25,400.00
				$         4,11,400.00
Total Cost accounted for				$       12,66,400.00