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., 5,000 units, 40% completed 13,900 To Finished Goods, 115,000 units ? Direct materials, 118,000 units @ $1.9 224,200 Direct labor 204,900 Factory overhead 79,740 Bal. ? units, 70% completed ? 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. $ 8,340 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? 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?

Answer 1

Solution:

Assembly Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	5000
Units started this period	118000
Total unit to be accounted for	123000
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 60%	5000	0	3000
Started and completed currently	110000	110000	110000
Transferred to finished goods	115000	110000	113000
Units in ending WIP Material - 100% Conversion - 70%	8000	8000	5600
Total units accounted for	123000	118000	118600

Assembly Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$508,840.00	$224,200.00	$284,640.00
Equivalent units		118000	118600
Cost per equivalent unit		$1.90	$2.40

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	$13,900
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (3000 * $2.40)	$7,200		$7,200
Total Cost from beginning inventory	$21,100
Current cost of unit started and completed:
Material (110000*$1.90)	$209,000	$209,000
Conversion (110000*$2.40)	$264,000		$264,000
Total cost of unit started and completed	$473,000
Total cost of unit transferred out	$494,100
Cost assigned to ending WIP:
Material (8000*$1.90)	$15,200	$15,200
Conversion (5600*$2.40)	$13,440		$13,440
Total ending WIP inventory	$28,640
Total cost accounted for	$522,740

Refer above production cost report

1. Cost of beginning work in process inventory completed this period = $7,200

2. Cost of units transferred to finished goods during the period = $494,100

3. Cost of ending work in process inventory = $28,640

4a. Cost per unit of the completed beginning work in process inventory = $21,100/5000 = $4.22 per unit

4b. Yes, production costs change from the preceding period as cost per unit for current period is = $1.90 + $2.40 = $4.30

4c. Conversion cost per unit in beginning WIP = ($13,900 - 5000*$1.90) / (5000*40%) = $2.20 per unit

Change in conversion cost per equivalent unit from previous period to current period = $2.40 - $2.20 = $0.20 increase