Question

3) Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September, the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete for conversion costs. Other data for the month include: 1,500 units 2,000 units 3,000 units Beginning work-in-process inventory Units started Units completed and placed in finished goods Cost added during the period Cost of direct materials Conversion costs Beginning work-in-process costs: Materials Conversion $245,000 $202,400 $175,000 $76,000 A) B) Required: Determine the equivalent units of production for materials and conversion costs. Determine the cost per equivalent unit for materials and conversion costs. Prepare a production cost worksheet with supporting of process costing to show amount transferred out of WIP and the amount remaining in ending WIP.

Answer 1

A)

Equivalent units of Production
	Units	% Materials	EUP- Materials	% conversion	EUP- Conversion
Units completed and transferred	3000	100%	3000	100%	3000
Ending work in process- units	500	100%	500	60%	(500*60%)= 300
	3500		3500		3300

Ending work in process- units= 1500+2000-3000= 500 units

B) Calculation of Cost per equivalent units for materials and conversion costs

	Materials	Conversion
Cost of beginning inventory	$175000	$76000
Cost incurred this period	245000	202400
Total costs	$420000	278400
Equivalent units of production	3500	3300
Cost per equivalent units	$120	$84.36

C)

		Equivalent Units
Quantities	Physical Units	Materials	Conversion
Units to be accounted for:
Beginning work in process- units	1500
Units started	2000
Total units to be accounted for	3500
Units accounted for
Units completed and transferred	3000	3000	3000
Ending work in process units	500	500	(500*60%)= 300
Total units accounted for	3500	3500	3300
Costs		Materials	Conversion	Total
Cost of beginning work in process		$175000	76000	$251000
Cost added during the period		245000	202400	447400
Total costs		$420000	$278400	698400
Equivalent units of production		3500	3300
Units costs		$120	$84.36	$204.36
Costs to be accounted for:
Beginning work in process				$251000
Units started				447400
Total costs				$698400
Cost Reconciliation Schedule
Cost accounted for
Transferred out ($204.36*3000)		$613080
Ending work in process
Materials (500*$120)	60000
Conversion (300*$84.36)=	25308	85308
Total costs		$85308