Question

MANAGERIAL ACCOUNTING DISCUSSION PROBLEM 7 PROCESS COSTING-SINGLE DEPARTMENT Van Buren Company manufactures a product that uses a process cost system to accumulate its costs of production. The following information is available for the month of February regarding costs of production for this product. VAN BUREN COMPANY COSTS OF PRODUCTION FOR PROCESS COSTING ANALYSIS FOR MONTH OF FEBRUARY Beginning WIP: Direct Materials 40,000 Conversion Costs 90,000 Current Period: Direct Materials 375,900 Conversion Costs 575,250 The company had 5,000 units in beginning work in process inventory which were 80% complete as to materials and 40% complete as to conversion costs; 35,000 units were completed during the month; and there were 8,000 units remaining in the ending work in process inventory which were 60% complete as to materials and 30% complete as to conversion costs. REQUIRED: (1) Using the attached schedules, prepare a cost of production report for Van Buren Company for the month of February, assuming the company uses a FIFO cost flow assumption for its inventories. Round all costs per equivalent unit to four decimal places and all other dollar amounts to the nearest whole dollar. Using the attached schedules, prepare a cost of production report for Van Buren Company for the month of February, assuming the company uses an average cost flow assumption for its inventories. Round all costs per equivalent unit to five decimal places and all other dollar amounts to the nearest whole dollar.

Answer 1

VAN BUREN COMPANY SCHEDULE OF PHYSICAL AND EQUIVALENT UNITS - FIFO FOR THE MONTH OF FEBRUARY
		Equivalent Units
	Physical Units	Direct Material	Conversion Cost
Units to Account for:
Beginning WIP inventory	5000
Units started During the Period	38000
Total Units to Account For	43000
Units Accounted For;
Units Completed During the Period
From Beginning Inventory	5000	1000	3000
Units started and completed during the period	30000	30000	30000
Total Units completed during the period	35000	31000	33000
Units in ending WIP inventory	8000	4800	2400
Total Units Accounted For	43000	35800	35400
VAN BUREN COMPANY UNIT COST ANALYSIS SCHEDULE - FIFO FOR THE MONTH OF FEBRUARY
	Direct Material	Conversion Cost	Total
Costs to Account For:
Costs from Beginning WIP inventory	40000	90000	130000
Current Period Cost	375900	575250	951150
Total Costs to Account For	415900	665250	1081150
Divided by Equivalent Units	35800	35400
Cost per Equivalent Unit(CURRENT COST/EQ. UNITS)	10.5	16.25
VAN BUREN COMPANY COST SUMMARY SCHEDULE - FIFO FOR THE MONTH OF FEBRUARY
	Direct Material	Conversion Cost	Total
Costs Accounted For:
Costs From Beginning WIP Inventory	40000	90000	130000
To complete Beginning WIP inventory
Direct Materials	10500		10500
Conversion Costs		48750	48750
Units started and Completed during the period
Direct Materials	315000		315000
Conversion Costs		487500	487500
Total Cost of Units Completed and Transferred to Finished Goods	365500	626250	991750
Ending WIP
Direct Materials	50400		50400
Conversion Costs		39000	39000
Total Cost of Ending Wip	50400	39000	89400
Total Costs Accounted For:	415900	665250	1081150

VAN BUREN COMPANY SCHEDULE OF PHYSICAL AND EQUIVALENT UNITS - AVERAGE COST FOR THE MONTH OF FEBRUARY
		Equivalent Units
	Physical Units	Direct Material	Conversion Cost
Units to Account for:
Beginning WIP inventory	5000
Units started During the Period	38000
Total Units to Account For	43000
Units Accounted For;
Units Completed During the Period
From Beginning Inventory	5000
Units started and completed during the period	30000
Total Units completed during the period	35000	35000	35000
Units in ending WIP inventory	8000	4800	2400
Total Units Accounted For	43000	39800	37400
VAN BUREN COMPANY UNIT COST ANALYSIS SCHEDULE - AVERAGE COST FOR THE MONTH OF FEBRUARY
	Direct Material	Conversion Cost	Total
Costs to Account For:
Costs from Beginning WIP inventory	40000	90000	130000
Current Period Cost	375900	575250	951150
Total Costs to Account For	415900	665250	1081150
Divided by Equivalent Units	39800	37400
Cost per Equivalent Unit	10.44974874	17.78743316
VAN BUREN COMPANY COST SUMMARY SCHEDULE - AVERAGE COST FOR THE MONTH OF FEBRUARY
	Direct Material	Conversion Cost	Total
Costs Accounted For:
Costs From Beginning WIP Inventory
To complete Beginning WIP inventory
Direct Materials
Conversion Costs
Units started and Completed during the period
Direct Materials
Conversion Costs	(COST PER EQ UNIT*35000 UNITS)
Total Cost of Units Completed and Transferred to Finished Goods	365741.206	622560.1604	988301.3665
Ending WIP
Direct Materials	50158.79397		50158.79397
Conversion Costs		42689.83957	42689.83957
Total Cost of Ending Wip	50158.79397	42689.83957	92848.63354
Total Costs Accounted For:	415900	665250	1081150