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

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	80%	1,350
Total Equivalent units				47,000		46,250
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			89,300		189,625
Equivalent Units			47,000		46,250
Cost per Equivalent unit			1.9		4.1
TOTAL COST ACCOUNTED FOR:
Units Completed from Beginning WIP (2000 units)
			Equivalent unit	Cost per EU	Total Cost
Beginning Cost					7980
Material			0	1.9	0
Conversion Cost			900	4.1	3690
Cost of units completed from Beg WIP					11670
Units started and Transferred out (44000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			44,000	1.9	83600
Conversion Cost			44,000	4.1	180400
Total Cost of Units completed and transferred out:					264000
Ending Work in process (3,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			3,000	1.9	5700
Conversison Cost			1,350	4.1	5535
Total cost of Ending Work in process:					11,235
Req A: Cost of Beginning WIP complted this year: $ 11670
Req B: Cost of units transferred to FG: (11670+264000): $ 275670
Req C: Cost of Units of Ending WIP: $ 11235
Req D:
a. cost per unit of Beginning WIP (11670/2000): $5.835 per unit
b. Yes, production cost has been increassed. This is imperative from Cost per unit of beginnig Wip $5.835 and current units is $6.10
c. Total Beginnning Coost of WIP					7980
Less: material cost (2000 units @1.90)					3800
Conversion cost					4180
Number of conversion units (2000*55%)					1100
Conversion cost per unit					3.8
Conversion cost per unit is $3.80 in previous year as compared to $4.10 in current year
INCREASE IN CONVERSION COST