Question

The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $46,620 of direct materials. ACCOUNT Work in Process-Forging Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Nov. 54,131 421,600 475,731 1 Bal., 3,700 units, 70% completed 30 Direct materials, 34,000 units 30 Direct labor 30 Factory overhead 30 Goods finished, 2 units 30 Bal., 3,000 units, 70% completed 43,100 59,530 518,831 578,361 ? a. Determine the number of units transferred to the next department. units b. Determine the costs per equivalent unit of direct materials and conversion. If required, round your answer to two decimal places. Cost per equivalent unit of direct materials $ Cost per equivalent unit of conversion c. Determine the cost of units started and completed in November.

Answer 1

Answers

• [a]
  No of units transferred = 3700 beg units + 34000 units started – 3000 ending units
  = 3700 + 34000 – 3000
  = 34,700 units
• Working for equivalent units and cost per EU:

EUP - FIFO Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units of ENDING WIP	3,000	100.0%	3,000	70.0%	2,100
Units STARTED & COMPLETED	31,000	100%	31,000	100%	31,000
Units of beginning WIP	3,700	0.00%	-	30%	1,110
Equivalent Units of Production			34,000		34,210
COST per EUP			Material		Conversion
Cost incurred this period			$       421,600.00		$                  102,630.00
Total Costs		Costs	$       421,600.00	Costs	$                  102,630.00
Equivalent units of production		EUP	34,000	EUP	34,210
Cost per EUP			$           12.40000		$                          3.0000

• [b]
  Cost per equivalent unit of direct materials = $ 12.40
  Cost per EU of conversion = $ 3.00
• [c]
  Cost of units started and completed = $ 477,400

Cost of Units started & completed this period:	EUP	Cost per EUP	Total Cost
- Direct Materials	31,000.00	12.40	384,400.00
- Conversion	31,000.00	3.00	93,000.00
Total costs started & Completed this period			477,400.00