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In: Accounting

Moon Gazers, Inc., produces telescopes for use by high school students. All direct materials used in...

Moon Gazers, Inc., produces telescopes for use by high school students. All direct materials used in the production of telescopes are added at the beginning of the manufacturing process. Labor and overhead are added evenly thereafter, as each unit is assembled, adjusted, and tested. Moon Gazers uses process costing and had the following unit production information available for the months of January and February. Jan. Feb. Number of units in beginning work in process inventory 0 120 Number of units started during the month 300 400 Total number of units transferred to finished goods 180 320 The units remaining in work in process at the end of January were approximately 60 percent complete. During the month of February, all of the beginning work in process units were completed and the units remaining in work in process at the end of the month were approximately 80 percent complete.

a. For the month of January, calculate the equivalent units produced for each of the two cost categories—direct materials and labor and overhead.
b. For the month of February, calculate the equivalent units produced for each of the two cost categories—direct materials and labor and overhead.

Solutions

Expert Solution

Solution:

Moon Gazers INC. (January)
Computation of Equivalent unit (FIFO)
Particulars Physical units Direct Material Conversion (labor & Overhead)
Units to be accounted for:
Beginning WIP Inventory 0
Units started this period 300
Total unit to be accounted for 300
Units Accounted for:
Units completed and transferred out
From beginning inventory 0 0 0
Started and completed currently 180 180 180
Units in ending WIP
Material - 100%
Conversion - 60%		 120 120 72
Equivalent unit produced 300 300 252
Moon Gazers INC. (Feburary)
Computation of Equivalent unit (FIFO)
Particulars Physical units Direct Material Conversion (labor & Overhead)
Units to be accounted for:
Beginning WIP Inventory 120
Units started this period 400
Total unit to be accounted for 520
Units Accounted for:
Units completed and transferred out
From beginning inventory
Direct material - 0%
Conversion - 40%		 120 0 48
Started and completed currently 200 200 200
Units in ending WIP
Material - 100%
Conversion - 80%		 200 200 160
Equivalent unit produced 520 400 408

ekkarill92 answered 1 year ago
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