Question

Required Information The following information applies to the questions displayed below.) During April, the first production department of a process manufacturing system completed its work on 375,000 units of a product and transferred them to the next department. Of these transferred units, 75,000 were in process in the production department at the beginning of April and 300.000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of April. 97.000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion. Compute the number of equivalent units with respect to both materials used and conversion used in the first production department for April using the weighted average method. Equivalent Units of Production - Weighted Average Units % Materials EUP—Materials % Conversion EUP_Conversion

Answer 1

Production Department Flow of Units and Equivalent Units Calculation Equivalent Units % of % of Physical Completion- Materials Completion- Units Material Conversion Completed and Transferred out 375,000 100% 375,000 100% Ending Inventory 97,000 80% 77,600 30% Total units 472,000 452,600 Conversion 375,000 29,100 404,100 Process Cost Report Beginning work-in-process Costs added during the period Total Costs to Account For Divided by Total Equivalent units (EUP) Average Cost / Equivalent Unit Materials $ 180,260 $1,222,800 $1,403,060 452,600 $3.1000 Conversion $48,036 $800,574 $848,610 404,100 $2.1000 Total $228,296 $2,023,374 $2,251,670

Cost of units transferred out: Direct materials Conversion Cost of Goods Manufactured Total cost $1,162,500 $787,500 $1,950,000 Ending Inventory: Direct materials Conversion Cost of Ending Inventory Total cost $240,560 $61,110 $301,670 Total Costs Allocated $2,251,670 ($1950000 + $301670] Workings: Under weighted average method, equivalent units are to be calculated only for units completed & transferred out and units lying as ending work in process as it is assumed that the units once entered into the process become integral part of total units and no segregation between units transferred from beginning work in process and introduced during current process. Conversion cost includes Labor + Overheads. So,

Physical units of production: Units in beginning inventory Add: Units started during current period Less: Units in ending inventory Units completed and transferred out 75,000 397,000 -97,000 375,000 Particulars Equivalent Units of Production (EUP) Whole EUP- Units Materials Materials Conversion 375,000 100% 375,000 100% 97,000 80% 77,600 30% 472,000 452,600 Completed and transferred Ending work in process Equivalent Units of Production (EUP) EUP Conversion 375,000 29,100 404,100 [375000 units x 100%; 375000 units x 100%] [97000 units x 80%; 97000 units x 30%] Cost per equivalent units of production Cost of beginning work in process Cost added during the period Total Materials Costs & Conversion Costs Divided by Equivalent units of Production (EUP) Cost per Equivalent units of Production Materials $180,260 $1,222,800 $1,403,060 452,600 $3.10 Conversion $48,036 $800,574 $848,610 404,100 [As computed EUP schedule presented above] $2.10 ($1403060 / 452600 units = $3.1; $848610 / 404100 units = $2.1]

Cost of goods completed & transferred EUP Totals Cost per EUP $3.1000 $2.1000 Materials Conversion Total Cost of goods completed & transferred 375,000 375,000 | $1,162,500 [375000 units x $3.1] $787,500 [375000 units x $2.1] $1,950,000 Cost of ending work-in-process EUP Totals Cost per EUP $3.1000 $2.1000 Materials Conversion Total cost of ending work-in-process 77,600 29,100 $240,560 $61,110 $301,670 [77600 units x $3.1] [29100 units x $2.1]

Production Department Flow of Units and Equivalent Units Calculation Physical Units Conversion % of Completion- Material 40% 100% Beginning work in process Started and completed during the period 75,000 300,000 375,000 97,000 472,000 Equivalent Units % of EUP- Completion- Materials Conversion 30,000 60% 300,000 100% 330,000 77,600 30% 407,600 45,000 300,000 345,000 29,100 374,100 80% Ending work in process Total units Process Cost Report Total cost accounted for Total Equivalent units Cost per equivalent unit Materials $1,222,800 407,600 $3.00 Conversion $800,574 374,100 $2.14

Costs assigned to production: Materials Conversion Total $228,296 $2,023,374 ($1222800 + $800574] $2,251,670 Inventory in proces, beginning balance Costs incurred during the period Total costs accounted for Costs allocated to completed and partially completed units: Inventory in proces, beginning balance To complete inventory in process, beginning balnce Cost of completed beginning work in process Started and completed during the period Transferred to next department during the period Inventory in proces, ending inventory Total costs assigned $90,000 $96,300 $228,296 [Given] $186,300 $414,596 $1,542,000 (Ref: Workings] $1,956,596 $295,074 [Ref: Workings] $2,251,670 $232,800 $62,274 Workings: Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the goods transferred in are introduced at the beginning itself, beginning inventory is 60% complete in terms of materials and so 40% efforts would be required in current process or period whereas conversion costs would require the uncompleted portion of costs in current process or period. That is, it was complete 40% already and so 60% efforts would be required in current period.

Less: Units in beginning inventory Add: Units added during the period Less: Units in ending inventory Units completed and transferred out 75,000 397,000 (97,000) 375,000 --> Of which 75000 units shall be from beg. inventory; Bal. 300000 units from current. Equivalent Units of Production (EUP) % Particulars Whole Units 75,000 300,000 375,000 97,000 472,000 Materials 40% 100% EUP- Materials 30,000 300,000 330,000 77,600 407,600 Conversion 60% 100% Beginning work in process Started, Completed and transferred Transferred to next process Ending work in process Equivalent Units of Production (EUP) EUP- Conversion 45,000 300,000 345,000 29,100 374,100 [75000 x 40% for DM; 75000 x 60% for conversion] [300000 units x 100% for all] 80% 30% [97000 x 80%; 97000 x 30%] Cost per equivalent units of production Direct Materials Conversion [Under FIFO method, cost of beginning inventory shall not be considered] Cost of beginning work in process Cost added during the period Total Materials Costs & Conversion Costs Equivalent units of Production (EUP) Cost per Equivalent units of Production $1,222,800 $1,222,800 407,600 $3.00 $800,574 $800,574 374.100 $2.14 [$1222800 / 407600 units = $3; $800574 / 374100 units = $2.14]

Cost of goods completed & transferred EUP Cost per EUP Totals Materials - Beginning cost Conversion - Beginning Cost Cost of goods completed & trfd from beginning $180,260 $48,036 $228,296 [Given] [Given] 30,000 45,000 Materials - Current Cost for beginning WIP Conversion - Current Cost for beginning WIP Total current cost for beginning WIP Total Cost of goods completed & transferred from WIP Materials - For current units Conversion - For current units Total Cost of goods completed & transferred out $3.00 $90,000 [30000 units x $3] $2.14 | $96,300 [45000 units x $2.14] $186,300 $414,596 [$228296 + $186300] $900,000 [300000 units x $3] $2.14 $642,000 [300000 units x $2.14] $1,956,596 ($414596 + $900000 + $642000) 300,000 300,000 Cost of ending work-in-process EUP OP | Totals Cost per EUP $3.00 $2.14 Materials Conversion Total cost of ending work-in-process 77,600 29,100 $232,800 $62,274 $295,074 [77600 units x $3] [29100 units x $2.14]