Question

Problem # 1:

Mike’s Brushes Inc. manufactures electric toothbrushes. The brushes are manufactured in 2 sequential processes: Interior and Assembly. The electronics are manufactured in-house in the Interior Department and the casing and bristles are purchased from an outside manufacturer and are added in the Assembly Department.

Information related the Interior Department for the month of March can be summarized as follows

Interior Department:

Beginning Units: 1,300 – 70% completed

Ending Units: 1,000 – 30% completed

New Units started this month: 3,000

Direct Materials costs in beginning WIP: $310

Conversion costs in beginning WIP: $705

Direct Materials costs incurred this month: $2,098

Conversion costs incurred this month: $4,047

In the Interior Department, direct materials are added at the beginning of the process while conversion costs are added uniformly throughout the assembly process.

Assuming Ben’s Brushes uses the weighted average method for process costing, prepare a Product Cost Report reflecting all five steps of the process (Round per unit costs to the nearest cent). Show your computations.

Answer 1

1. Reconcile no of physical units :

	Physical units		Physical units
Beginning inventory	1300	Units completed	3300
Units started	3000	Ending units	1000
Total units	4300	Total units	4300

Calculate equivalent unit :

	Physical unit	%	Material	%	conversion cost
Units completed	3300	100%	3300	100%	3300
Ending work in process	1000	100%	1000	30%	300
Total equivalent unit			4300		3600

Calculate cost per equivalent unit :

	Material	Conversion cost
Beginning work in process	310	705
Cost added during period	2098	4047
Total cost	2408	4752
Equivalent unit	4300	3600
cost per equivalent unit	0.56	1.32

4. Reconcile the cost of work in process :

Cost to be accounted for
Beginning work in process	1015
Cost added during period	6145
Total cost to be accounted for	7160
Cost accounted as
Units transferred out (1.32+0.56)*3300	6204
ending work in process (1000*0.56+300*1.32)	956
Total cost accounted as	7160