David’s company uses a process costing system in the manufacture of chairs. David’s worked on 2,600...
David’s company uses a process costing system in the manufacture of chairs. David’s worked on 2,600 chairs the past month, 2,200 of which were completed during the period. The remaining chairs were 40% complete. Each chair requires $15 in direct materials that are included in the process when a chair is started. During the month the direct labor and manufacturing overhead for the period was $70,000 and there were $600 direct labor and manufacturing overhead at the beginning of the period in the works in process account. Using the weighted average method, what was the total cost of chairs transferred to finished goods at the end of the month? What was the total cost of baskets still in process at the end of the month?
Homework Answers
Solution:
| David Company | |||
| Computation of Equivalent unit of Production | |||
| Particulars | Physical Units | Material | Conversion |
| Units accounted for: | |||
| Unit completed & Transferred out | 2200 | 2200 | 2200 |
| Units in ending inventory: | 400 | ||
| Material (100%) | 400 | ||
| Conversion (40%) | 160 | ||
| Equivalent units of production | 2600 | 2600 | 2360 |
|
David Company Computation of Cost per equivalent unit |
|||
| Particulars | Material | Conversion | Total |
| Opening WIP | $0 | $600 | $600 |
| Cost Added during Period | $39,000 | $70,000 | $109,000 |
| Total cost to be accounted for | $39,000 | $70,600 | $109,600 |
| Equivalent units of production | 2600 | 2360 | |
| Cost per Equivalent unit | $15.00 | $29.92 | |
|
David Company Computation of Cost of ending WIP and units completed & transferred out |
|||
| Particulars | Material | Conversion | Total |
| Equivalent unit of Ending WIP | 400 | 160 | |
| Cost per equivalent unit | $15.00 | $29.92 | |
| Cost of Ending WIP (Equivalent unit * Cost per equivalent unit) | $6,000 | $4,786 | $10,786 |
| Units completed and transferred | 2200 | 2200 | |
| Cost of units completed & Transferred (Unit completed * cost per equivalent unit) | $33,000 | $65,814 | $98,814 |
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