Question

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Work in Process—Assembly Department
Bal., 2,000 units, 55% completed	5,420	To Finished Goods, 46,000 units
Direct materials, 47,000 units @ $1.5	70,500
Direct labor	79,700
Factory overhead	30,940
Bal. ? units, 40% completed	?

Cost per equivalent units of $1.50 for Direct Materials and $2.40 for Conversion Costs.

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

1. Cost of beginning work in process inventory completed this period.	$
2. Cost of units transferred to finished goods during the period.	$
3. Cost of ending work in process inventory.	$
4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent.	$

b. Did the production costs change from the preceding period?
Yes

c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?
Increase

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				2,000
Add: Units Started in Process				47,000
Total Units to account for:				49,000
UNITS TO BE ACCOUNTED FOR:
Units completed from Beginning WIP				2000
Units started and completed				44,000
Ending Work in Process				3,000
Total Units to be accounted for:				49,000
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units completed from Beg. WIP			0%	0	45%	900
Units started and completed			100%	44,000	100%	44,000
Ending Work in Process			100%	3,000	40%	1,200
Total Equivalent units				47,000		46,100
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			70,500		110,640
Equivalent Units			47,000		46,100
Cost per Equivalent unit			1.5		2.4
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (2000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					5420
Material			0	1.5	0
Conversion Cost			900	2.4	2160
Cost of units completed from Beg WIP					7580
Units started and Transferred out (44000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			44,000	1.5	66000
Conversion Cost			44,000	2.4	105600
Total Cost of Units completed and transferred out:					171600
Ending Work in process (3,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			3,000	1.5	4500
Conversison Cost			1,200	2.4	2880
Total cost of Ending Work in process:					7,380
Req A:
1. Cost of beginning WIP completed is $ 7580
2. Cost of Units transferred to finished goods (7580+171600): $ 179180
3.Cost of Ending WIP is $ 7380
4. Cost per unit of Completed Beginning WIP inventory (7580/2000) = $3.79 per unit
Req B:
Yes, the production cost has been changed.
It has been increased from $ 3.79 per unit to $3.90 per unit
Req C:
Beginning cost of Beg. WIP					5420
Less: material cost included (2000 units @$1.50)					3000
Conversiion ccost inccluded					2420
Divided Equivalennt units of Conversion cost					1100
Conversion cost per equivalent unit					2.2
Increase, from $ 2.20 per equivalent unit to $2.40 per equivalent unit