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 7,980 To Finished Goods, 46,000 units ? Direct materials, 47,000 units @ $1.9 89,300 Direct labor 136,500 Factory overhead 53,125 Bal. ? units, 45% completed ? Cost per equivalent units of $1.90 for Direct Materials and $4.10 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? 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?

Answer 1

Solution 1:

Cost of beginnign WIP completed this period = Equivalent units of conversion cost completed * cost per equivalent unit of conversion

= 2000*45%*$4.10 = $3,690

Solution 2 & 3:

Total current conversion cost = $136,500 + $53,125 = $189,625

Cost per equivalent unit of conversion = $4.10

Equivalent unit of conversion = $189,625/$4.10 = 46250 units

Total units completed = 46000 units

Units completed for beginning WIP = 2000 units

Units started and completed currently = 46000-2000 = 44000 units

Equivalent unit of beginning WIP complete for conversion = 2000*45% = 900 units

Equivalent unit of ending WIP for conversion = 46250 - 44000 - 900 = 1350 units

% completion of ending WIP for conversion = 45%

Physical units in ending WIP = 1350/45% = 3000 units

Assembly Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	2000
Units started this period (46000+3000-2000)	47000
Total unit to be accounted for	49000
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 45%	2000	0	900
Started and completed currently	44000	44000	44000
Units in ending WIP Material - 100% Conversion - 45%	3000	3000	1350
Total units accounted for	49000	47000	46250

Assembly Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$7,980
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (900 * $4.10)	$3,690		$3,690
Total Cost from beginning inventory	$11,670
Current cost of unit started and completed:
Material (44000*$1.90)	$83,600	$83,600
Conversion (44000*$4.10)	$180,400		$180,400
Total cost of unit started and completed	$264,000
Total cost of unit transferred out	$275,670
Cost assigned to ending WIP:
Material (3000*$1.90)	$5,700	$5,700
Conversion (13500*$4.10)	$5,535		$5,535
Total ending WIP inventory	$11,235
Total cost accounted for	$286,905

Therefore cost of unit transferred to finished goods = $275,670

Cost of ending WIP = $11,235

Solution 4:

a. Cost per unit of completed beginning WIP inventory = $11670 / 2000 = $5.835 per unit

If direct material cost did not change from preceding period then converison cost included in opening WIP = $7,980 - 2000*$1.90 = $4,180

Equivalent units in opening WIP for conversion = 2000*55% = 1100 units

Cost per equivalent unit in preceding period = $4,180 / 1100 = $3.80 per unit

current conversion cost is $4.10 per unit.

Therefore conversion cost per equivalent unit increases for the current period.