Question

Use the following to answer questions wd 2: A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process For the month of January, there were no units in the beginning work in process inventory 20.000 units were started into production in Targary and there were 5.000 units that were 40% complete in the ending work in process inventory at the end of January What were the equivalent units of production for materials for the month of January 22,000 equivalent units b. 18,000 equivalent units c. 15,000 equivalent units d. 20.000 equivalent units What were the equivalent units of production for conversion costs for the month of January? a 15,000 equivalent units b.18,000 equivalent units c. 17,000 equivalent units d. 20,000 equivalent units The Fruit of the Womb Company makes 2 types of baby apparel: Bibs and Bonnets The Company uses two processes: Cutting and Sewing. In the Cutting Department, materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the cutting process. The bibs and bonnets are then transferred to the Sewing department. During the month of March, the following costs were in incurred in the Cutting Department: Bibs Bonnets Production Data Work in process - March 1 Units Completed and Transferred Out Work in process - March 31 Work in process - % complete 80,000 36,000 40% 15,000 19,000 75% Cost Data Direct Materials Labor Overhead $131,500 $230,000 $ 45.000 584,000 572,000 $12,500 Required: Calculate the equivalent units of production for materials and conversion costs. Calculate the unit costs of production Show the assignment of costs of units transferred out and in process

Answer 1

1.

All the material is added at the beginning of the process.

Equivalent units for material = 20,000

Option d.

2.

Units completed = 20,000 - 15,000

Equivalent units = 15,000 + (5,000 X 40%) = 17,000

Option c.

3.

a.

Equivalent units

Bids

Material = 80,000 + 36,000 = 116,000

Conversion = 80,000 + (36,000 X 40%) = 94,400

Bonnets

Material = 15,000 + 19,000 = 34,000

Conversion cost = 15,000 + (19,000 X 75%) = 29,250

b.

Units cost

Bids

Material = $131,500 / 116,000 = $1.13

Conversion cost = ($230,000 + $45,000) / 94,400 = $2.91

Bonnets

Material = $84,000 / 34,000 = $2.47

Conversion cost = ($72,000 + $12,500) / 29,250 = $2.89

c.

Bids

Cost of units transferred out = ($1.13 + $2.91) X 80,000 = $323,200

Cost of work in process = (36,000 X $1.13) + (36,000 X 40% X $2.91) = $82,584

Bonnets

Cost of units transferred out = ($2.47 + $2.89) X 15,000 = $80,400

Cost of work in process = (19,000 X $2.47) + (19,000 X 75% X $2.89) = $88,113