Question

PART B. Problems

1.              The CINEDivision of OMAR Sports Equipment Companymanufactures baseball gloves in its Milwaukee plant.  Two production departments are used in sequence: the Cutting Department and the Stitching Department.  In the Cutting Department, direct material consisting of imitation leather is placed into production at the beginning of the process.  Direct-labor and manufacturing overhead costs are incurred uniformly throughout the process.  The material is rolled to make it softer and then cut into the pieces needed to produce baseball gloves.

                  Below is presented a summary of the activity and costs in the Cutting Department during March.  The direct-material and conversion costs listed below for the March 1 work in process consist of costs that were incurred during February.  These costs were assigned to the units remaining in process at the end of February.  

              

INFORMATION

Work in process, March 1	25,000 units
Direct material: 100% complete, cost of	$143,000
Conversion: 40% complete, cost of	474,700
Balance in work in process, March 1	$617,700
Units started during March	30,000 units
Units completed during March and transferred out of the Cutting Department	35,000 units
Work in process, March 31
Direct Material: 100% complete
Conversion: 80% complete
Costs incurred during March:
Direct material	$165,000
Conversion costs:
Direct labor	$1,000,000
Applied manufacturing overhead	1,174,000
Total conversion costs	$2,174,000

Required: Weighted Average and FIFO methods

Prepare a physical flow schedule for the month of March.

Calculate equivalent units for materials  AND  equivalent units for conversion.

Calculate cost per equivalent unit for materials AND cost per equivalent unit for conversion.

Calculate the value of work in process inventory on March 31 and cost of goods transferred out during March.

Answer 1

Req 1. Physical Flow:
UNITS TO ACCOUNT FOR:
Beginning Work in Process units				25,000
Add: Units Started in Process				30,000
Total Units to account for:				55,000
UNITS TO BE ACCOUNTED FOR:
Units started and completed				35,000
Ending Work in Process				20,000
Total Units to be accounted for:				55,000
Req 2. Equivalent Units
Equivalent Units:
			Material Cost		Conversion
			% Completion	Units	% Completion	Units
Units started and completed			100%	35,000	100%	35,000
Ending Work in Process			100%	20,000	80%	16,000
Total Equivalent units				55,000		51,000
Req 3 Cost per unit
TOTAL COST TO ACCOUNT FOR:
			Material		Conversion
Beginning work in Process			143,000		474,700
Cost Added during May			165,000		2,174,000
Total Cost to account for:			308,000		2,648,700
Total Cost to account for:					2,956,700
COST PER EQUIVALENT UNIT:
			Material		Conversion
Total cost added during the year			308,000		2,648,700
Equivalent Units			55,000		51,000
Cost per Equivalent unit			5.6		51.935
Req 4.
TOTAL COST ACCOUNTED FOR:
Units started and Transferred out (35,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			35,000	5.6	196000
Conversion Cost			35,000	51.935	1817725
Total Cost of Units completed and transferred out:					2013725
Ending Work in process (20,000 units)
			Equivalent unit	Cost per EU	Total Cost
Material			20,000	5.6	112000
Conversison Cost			16,000	51.935	830960
Total cost of Ending Work in process:					942,960