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., 9,000 units, 60% completed	37,440	To Finished Goods, 207,000 units	?
Direct materials, 212,000 units @ $1.7	360,400
Direct labor	671,900
Factory overhead	261,340
Bal. ? units, 75% completed	?

Cost per equivalent units of $1.70 for Direct Materials and $4.40 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

Solution a:

Assembly Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	9000
Units started this period	212000
Total unit to be accounted for	221000
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 40%	9000	0	3600
Started and completed currently	198000	198000	198000
Units in ending WIP Material - 100% Conversion - 75%	14000	14000	10500
Total units accounted for	221000	212000	212100

Assembly Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$1,293,640.00	$360,400.00	$933,240.00
Equivalent units		212000	212100
Cost per equivalent unit		$1.70	$4.40

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	$37,440
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (3500 * $4.40)	$15,840		$15,840
Total Cost from beginning inventory	$53,280
Current cost of unit started and completed:
Material (198000*$1.70)	$336,600	$336,600
Conversion (198000*$4.40)	$871,200		$871,200
Total cost of unit started and completed	$1,207,800
Total cost of unit transferred out	$1,261,080
Cost assigned to ending WIP:
Material (14000*$1.70)	$23,800	$23,800
Conversion (10500*$4.40)	$46,200		$46,200
Total ending WIP inventory	70,000
Total cost accounted for	$1,331,080

Refer above production cost report:

Cost of beginning work in process inventory completed this period = $53,280

Cost of units transferred to finished goods during the period = $1,261,080

Cost of ending work in process inventory = $70,000

Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. = $53,280 /9000 = $5.92 per unit

Solution b:

Yes production cost change from the preceding period.

Solution c:

If direct material cost per unit did not change from the preceding period then direct material cost in beginning WIP = 9000 * $1.70 = $15,300

Conversion cost in beginning WIP = $37,440 - $15,300 = $22,140

Total equivalent unit of conversion in begining WIP = 9000*60% = 5400

Cost per equivalent unit of conversion in beginning WIP = $22,140 / 5400 = $4.10 per unit

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