Question

Problem 17-7A

Owen Company manufactures bicycles and tricycles. For both products, materials are added at the beginning of the production process, and conversion costs are incurred uniformly. Owen Company uses the FIFO method to compute equivalent units. Production and cost data for the month of March are as follows.

Production Data—Bicycles Units Percentage Complete Work in process units, March 1 190 80 % Units started into production 1,400 Work in process units, March 31 310 40 %

Cost Data—Bicycles Work in process units, March 1 $19,330 Direct materials 50,000 Direct labor 26,500 Manufacturing overhead 29,900

Production Data—Tricycles Units Percentage Complete Work in process units, March 1 140 75 % Units started into production 1,000 Work in process units, March 31 60 25 %

Cost Data—Tricycles Work in process units, March 1 $6,050 Direct materials 30,400 Direct labor 14,200 Manufacturing overhead 19,800

1. Calculate the equivalent units of production for materials and conversion costs for both the bicycles and the tricycles.

2. Calculate the unit costs of production for materials and conversion costs for both the bicycles and the tricycles.

3. Calculate the assignment of costs to units transferred out and in process at the end of the accounting period for both the bicycles and the tricycles.

4. Prepare a production cost report for the month of March for the bicycles only

Answer 1

Answer 1

Particular	Material	Conversion
Equivalent Units Bycycle	1590	1442
Equivalent Units Tricycle	1140	1130

Answer 2

Particular	Material	Conversion
Bycycle	31.4	39.1
TriCycles	26.67	30.09

Answer 3

	Bycycle		Tricycle
	Units	Cost	Units	Cost
Completed	1280	109645.4	1080	67345.58
WIP 31 March	310	14598.4	60	2051.36

Workings:-

Bicycles
March 1 WIP (1)	190
Unit started (2)	1400
March 31 WIP (3)	310
Unit Started and completed (1+2-3)	1280
	Material				Conversion
	Units (1)	% completed	% completion in March (2)	Equivelent Units (1*2)	Units (1)	% completed	% completion in March (2)	Equivelent Units (1*2)
March 1 WIP	190	100%	0%	0	190	80%	20%	38
Unit started and completed	1280	0%	100%	1280	1280	0%	100%	1280
March 31 WIP	310	0%	100%	310	310	0%	40%	124
				1590				1442
Cost	Material	Direct Labour	Mfg Overhead	Total
During the month (1)	50000	26500	29900
Equivalent Units (2)	1590	1442	1442
Per Unit (3)=(1/2)	31.4	18.4	20.7
Unit transfered (4)	1280.0	1280.0	1280.0
Cost of unit Transffered (5)=(3)*(4)	40251.6	23522.9	26540.9	90315.4
Openin WIP cost (6)				19330
Total cost of unit Transfered (7)=(5+6)				109645.4
Equivalent Unit in WIP March 31 (8)	310.0	124.0	124.0
Closing WIP cost (3*8)	9748.4	2278.8	2571.2	14598.4
Tricycles
March 1 WIP (1)	140
Unit started (2)	1000
March 31 WIP (3)	60
Unit Started and completed (1+2-3)	1080
	Material				Conversion
	Units (1)	% completed	% completion in March (2)	Equivelent Units (1*2)	Units (1)	% completed	% completion in March (2)	Equivelent Units (1*2)
March 1 WIP	140	100%	0%	0	140	75%	25%	35
Unit started and completed	1080	0%	100%	1080	1080	0%	100%	1080
March 31 WIP	60	0%	100%	60	60	0%	25%	15
				1140				1130
Cost	Material	Direct Labour	Mfg Overhead	Total
During the month (1)	30400	14200	19800
Equivalent Units (2)	1140	1130	1130
Per Unit (3)=(1/2)	26.6667	12.56637168	17.52212389
Unit transfered (4)	1080	1080	1080
Cost of unit Transffered (5)=(3)*(4)	28800	13571.68142	18923.89381	61295.57522
Openin WIP cost (6)				6050
Total cost of unit Transfered (7)=(5+6)				67345.57522
Equivalent Unit in WIP March 31 (8)	60	15	15
Closing WIP cost (3*8)	1600	188.4955752	262.8318584	2051.327434