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., 4,000 units, 30% completed	12,400	To Finished Goods, 92,000 units	?
Direct materials, 94,000 units @ $1.9	178,600
Direct labor	286,700
Factory overhead	111,480
Bal. ? units, 30% completed	?

Cost per equivalent units of $1.90 for Direct Materials and $4.30 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

Step for solution
Step 1	Equivalent Units of production = Physical units multiplied by % of competition
Step 2	Calculate total cost to be accounted for
Step 3	Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4	Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5	Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For direct material 100% unit completed it means remaining 0% completed in this month.
For conversion cost 30% unit completed it means (100-30) remaining 70% completed in this month.

	Company Name
	Assembly Department production Report
	First in First out (FIFO) Method
	Month ended
	Summary of Physical units
	Units in beginning WIP inventory			4000
	Units started during month			94000
	Total unit to be accounted for			98000
	Units completed and transferred out			92000
	Units in ending WIP inventory (98000-92000)			6000
	Total unit accounted for			98000
	Equivalent Units of production
	Particulars	Physical units	Direct material		Conversion Cost
			%	Units	%	Units
	Units in beginning WIP inventory	4000	0%	0	70%	2800
	Units in Started and completed (92000-4000)	88000	100%	88000	100%	88000
	Units in ending WIP inventory	6000	100%	6000	30%	1800
	Equivalent Units of production			94000		92600
	Summary of cost to be accounted
		Direct material	Conversion Cost	Total
	Cost in beginning WIP	7600	4800	12400
	Cost incurred during Month (Add)	178600	398180	576780
	Total cost to be accounted for	186200	402980	589180
	Cost per Equivalent Unit
	Cost incurred during Month	178600	398180
	Equivalent Units of production	94000	92600
	Cost per Equivalent Unit	1.90	4.30	6.20
	Assign costs to units transferred out and units in ending WIP inventory
	Cost assigned to units transferred out
	Direct material	7600
	Conversion Cost	4800
	Cost in beginning WIP		12400
	Direct material (0*1.9)	0
	Conversion Cost (2800*4.3)	12040
	Cost incurred for complete beginning WIP		12040
	Direct material (88000*1.9)	167200
	Conversion Cost (88000*4.3)	378400
	Cost of units in Started and completed		545600
	Cost assigned to units transferred out		570040
	Cost assigned to units ending work in progress
	Direct material (6000*1.9)	11400
	Conversion Cost (1800*4.3)	7740
	Cost assigned to units ending work in progress		19140
	Total cost assigned		589180

	Total	Per units	Remarks
Direct material in beginning WIP (4000*1.90)	7600	1.90	7600/4000
Conversion cost in beginning WIP (12400-7600)	4800	4.00	4800/(4000*30%)
Cost per unit in preceding period		5.90
1. Cost of beginning work in process inventory completed this period. (12400+12040)			$   24,440
2. Cost of units transferred to finished goods during the period			$ 570,040
3. Cost of ending work in process inventory.			$   19,140
4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. (24440/4000)			$      5.90
Current period cost per Equivalent Unit			6.20
Yes, production costs change from the preceding period
Per unit Conversion cost of preceding period			4.00
Per unit conversion cost of current period			4.30
Impact on per unit conversion cost			Increase