In: Accounting
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.
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 |