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In: Accounting

CHAPTER 16 Swinn Company manufactures bicycles. Materials are added at the beginning of the production process,...

CHAPTER 16

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.

Solutions

Expert Solution

Solution 1:

Swinn Company
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 2:

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 3:

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 4:

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

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