Question

Kaeding Company manufactures car seats in its Hartford plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department.

		Physical Units		Direct	Conversion
		(Car Seats)		Materials	Costs
Work in​ process, October 1	5,400		$ 1,344,600			$ 337,190
Started during October 20172017	21,000
Completed during October 20172017	24,500
Work in​ process, October 31 Superscript	1,900
Total costs added during October 20172017			$4,305,000			$2,567,430

Superscript aDegree of​ completion: direct​ materials, ?%; conversion​ costs, 50​%.

Superscript bDegree of​ completion: direct​ materials, ?%; conversion​ costs, 70​%.

Requirement 1. For each cost​ category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule.

		Equivalent Units
	Physical	Direct	Conversion
Flow of Production	Units	Materials	Costs
Work in process beginning
Started during current period
To account for
Completed and transferred out during current period
Work in process, ending
Accounted for
Work done to date

1.	For each cost​ category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule.
2.	What issues should the manager focus on when reviewing the​ equivalent-unit calculations?
3.	For each cost​ category, summarize total assembly department costs for October 20172017 and calculate the cost per equivalent unit.
4.	Assign costs to units completed and transferred out and to units in ending work in process.

Answer 1

		Kaeding Company
			Equivalent Units
1)	Flow of Production	Physical Units	Direct Material	Conversion
	Work in Process beginning	5400
	Started during the current period	21000
	To account for	26400
	Completed and transferred out during the current period	24500	24500	24500
	Work in Process ending	1900	1900	1330
	Account for	26400	26400	25830
		Material	Conversion
	Work in Process ending	(1900*100%)	(1900*70%)
2)	To show better performance , a department manager report higher degree of completion as a result understated cost per equivalent units and overstated income.
3)		Total Production cost	Direct Material	Conversion
	Work in process , beginning	$                  16,81,790.00	$           13,44,600.00	$       3,37,190.00
	Cost added in current period	$                  68,72,430.00	$           43,05,000.00	$    25,67,430.00
	Total cost to account for	$                  85,54,220.00	$           56,49,600.00	$    29,04,620.00
	Cost incurred to date=(A)		$           56,49,600.00	$    29,04,620.00
	Equivalent Units=(B)		26400	25830
	Cost per Equivalent units=(A)/(B)		$                       214.00	$                112.45
4)	Assignment of cost
	Completed and transferred out	$                  79,98,059.62	$           52,43,000.00	$    27,55,059.62
	Ending Work in Process	$                    5,56,160.38	$             4,06,600.00	$       1,49,560.38
	Total cost accounted for	$                  85,54,220.00	$           56,49,600.00	$    29,04,620.00
	Assignment of cost
	Completed and transferred out		(24500*$214)	(24500*112.45)
	Ending Work in process		(1900*$214)	(1330*$112.45)