Question

After reviewing the Case 1 theres a case 2 please solve

2-04 (process cost intro NEW) References Mailings Review View A- A A A E 33 + 1 AaB+CcDdE ? A..A. EZZE : 3. AaBbccddee AaBbCcD No Spacing Heading 1 Normal Case Two: Okay, now assume the real thing that all the materials are added at the beginning of the process so that the first thing that happens is they sprinkle the special spice coating on, THEN start the baking. Here's a further breakdown of the cost of BWIP and the current costs for the period, as to Materials and Conversion Costs Beginning work in process Costs incurred in January Materials $ 10,000 30,000 $ 40,000 Conversion $ 32,776 130,024 $ 162.800 Total $ 42.776 160,024 S202 800 Questions 7) Why do you think that we need to break up the BWIP and Current costs in their materials and conversion? Let's do the same thing as for Case One: 8) Complete an accounting for the PHYSICAL units (part 1 of production report). How many PHYSICAL UNITS need to be accounted for? IF 12,000 were still in EWIP, how many were finished? Of the ones that were finished, how many were from the BWIP? How many were also started during the period? 9) Compute the equivalent units of production for the period. Be sure to compute equivalent units of BOTH materials and conversion 10) Why are the two amounts in #9 above different? 11) What are the cost objects? (same as Case One) 12) How much of the S202,800 can we TRACE directly to one of the cost objects? How much is left that needs to be allocated? 13) What was the unit cost of material for a WHOLE ple for the period? (Cost per equivalent unit). What is the unit cost of conversion for a V HOLE pie. 14) Let's apply the rates. How many equivalent units of materials in the EWIP? How much cost goes there? How many equivalent units of conversion are in EWIP? How many dollars is that? What's the total cost of EWIP? How many equivalent units of materials and conversion were completed and transferred out? How much cost is allocated there?

Answer 1

1)
Units in Beginning Work in process	20,000
Add:
Units started in current period	85,000
Total Units		105,000
Less:
Units in Ending Work in-process		(12,000)
Units finished during the current period (balancing figure)		93,000
Units completed during the current period	93,000
Less:
Units completed from beginning work in-process	20,000
Units started and completed in the current period	73,000
2)
	Percentage of work completed in current period	Units	Equivalent Units
Units in Beginning Work in process	75%	20,000	15,000
Units started and completed in the current period	100%	73,000	73,000
Units in Ending Work in-process	70%	12,000	8,400
Equivalent units of production		105,000	96,400
Equivalent units of production is 96,400
3)
The total costs of $ 202,800 can be bifurcated into two parts
(i) Costs of Beginning work-in- process	$42,776
(ii) Costs introduced in the current period	$160,024
Total costs	$202,800
There are two costs objects
(i) Costs of Beginning work-in- process
(ii) Equivalent units produced during the current period
4)
The costs of $ 42,776 is directly associated to the beginning work-in-process which is 25%
complete.This can be traced directly to the units completed from beginning work-in-process.
The balance amount if $ 160,024 introduced in the current period,is the cost left and needs to
be allocated among the following objects:
(i) Further process costs for units in beginning work-in-process
(ii) Units introduced and completed during the current period
(iii) Units in ending work-in-process
5)
Unit cost of a whole pie for the period = Cost per equivalent unit
Cost per equivalent unit = Costs introduced in current period / Equivalent units
Costs introduced in the current period	$160,024
Equivalent units of production	96,400
Cost per equivalent unit	$1.66
6)
Allocation of costs
	Percent completed in current period	Equivalent Units	Equivalent Cost per Units	Beginning WIP Costs	Current Period Costs
Costs incurred in current period
Units completed and transferred
Units in beginning WIP completed	75%	15000	$1.66		$24,900
Units started and completed in current period	100%	73000	$1.66		$121,180
Units in ending WIP	70%	8400	$1.66		$13,944
Total cost of the cost objects after allocation
	Beginning WIP Costs	Current Period Costs	Total Cost
Units in beginning WIP completed	$42,776	$24,900	$67,676
Units started and completed in current period	$0	$121,180	$121,180
Units in ending WIP	$0	$13,944	$13,944
Total cost of the cost objects after allocation	$42,776	$160,024	$202,800

Notes

The process costing account of the above mentioned transactions would appear as under:

	Units	Value		Units	Value
Opening WIP	20,000	$42,776	Units completed & transferred
Units started during the period	85,000	$160,024	Opening WIP	20,000	$67,676
			Units started during the period	73,000	$121,180
			Closing WIP	12,000	$13,944
	105,000	$202,800		105,000	$202,800