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., 9,000 units, 65% completed	31,635	To Finished Goods, 207,000 units	?
Direct materials, 212,000 units @ $1.5	318,000
Direct labor	492,900
Factory overhead	191,685
Bal. ? units, 45% 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.	$
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?

Answers -

No/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?

Answers -

Decrease/increase/remain the same?

Answer 1

Answer a

1. Cost of beginning work in process inventory completed this period:

Particulars	Calculation	Amount ($)
Cost incurred during the previous period		31,635
Cost incurred during the period
Direct Material		-
Conversion Cost	3,150 units x $ 3.30	10,395
Cost of beginning work in process inventory completed this period		42,030

2. Cost of units transferred to finished goods during the period:

Particulars	Calculation	Amount ($)
Direct Material	207,000 units x $ 1.50	310,500
Conversion Cost	207,000 units x $ 3.30	683,100
Cost of units transferred to finished goods during the period		993,600

3. Cost of ending work in process inventory:

Particulars	Calculation	Amount ($)
Direct Material	14,000 units x $ 1.50	21,000
Conversion Cost	6,300 units x $ 3.30	20,790
Cost of ending work in process inventory		41,790

4. Cost per unit of the completed beginning work in process inventory:

Cost per unit = Total costs of beginning work in process

                                 Beginning work in process inventory

                        = 42,030 = $ 4.67

                             9,000

Answer b

Yes, the production costs change from the preceding period.

Answer c.

Assuming that the direct materials cost per unit did not change from the preceding period, the conversion costs per equivalent unit will be:

Particulars	Calculation	Amount ($)
Cost incurred during the previous period		31,635
Less: Direct Material cost	9,000 units x $ 1.50	(13,500)
Conversion costs		18,135
Equivalent unit for conversion cost	9,000 units x 65%	5,850 units
Cost per unit of conversion cost	$ 18,135/ 5,850 units	3.10

Hence, the conversion, increased during the current period from $ 3.10 to $ 3.30.

Working Notes:

(A) Computation of the number of units in work in process at the end of the period:

Particulars	Units
Number of units in the work in progress at the beginning of the period	9,000
Number of units placed during the period	212,000
Less: Number of units finished in work in progress during the period	(207,000)
Number of units in the work in progress at the end of the period	14,000

(B) Computation of the number of equivalent units of production for direct materials and conversion:

Particulars	Whole units	Equivalent units
Direct Materials	Conversion
Inventory in process beginning (65% completed)	9,000	0	3,150 {9,000 units x (1 – 0.65)}
Started and Completed (207,000 – 9,000)	198,000	198,000	198,000
Transferred to finished goods	207,000	198,000	201,150
Inventory in process (45% completed)	14,000	14,000	6,300 (14,000 x 45%)
Total Equivalent units	221,000	212,000	207,450

(C) Computation of the cost per equivalent unit:

	Cost per Equivalent unit
	Direct Materials	Conversion Cost
Total cost incurred for the period In Assembly Department	$ 318,000	$ 684,585 ($ 492,900+ $ 191,685)
Total Equivalent units	212,000	207,450
Cost per Equivalent units	$ 1.50	$ 3.30
Total cost per unit	$ 4.80