Question

Howorth Dental Products is a London-based producer of a patented anti-microbial dental floss. All raw material is introduced at the beginning of the production process, but considerable processing time is needed to create the anti-microbial qualities of the specially designed floss. Howorth measures output in meters of floss and applies the weighted-average process costing method. The following information is available for a recent period:

Beginning work in process inventory:

141,000 meters at a cost of £46,100 for direct materials, £25,000 for direct labor, and £25,000 for factory overhead. The conversion process was 60% complete.

Units started into production: 261,000 meters

Units completed and transferred to finished goods: 383,000 meters

Ending work in process inventory: 19,000 meters, 35% complete

Additional costs incurred during the period:

Direct materials, £85,800

Direct labor, £98,300

Factory overhead, £98,700

Prepare a cost of production report for Howorth.

	A.	Equivalent units of direct material                     402,000 Equivalent units of direct labor                     389,650 Equivalent units of overhead                     389,650 Costs per equivalent unit $0.962 Transferred to Finished Goods $368,446 Total Ending Work in Process $10,449 Total Cost Allocation $378,895
	B.	Equivalent units of direct material                     413,000 Equivalent units of direct labor                     396,350 Equivalent units of overhead                     392,350 Costs per equivalent unit $0.9759 Transferred to Finished Goods $46,057 Total Ending Work in Process $10,343 Total Cost Allocation $478,400
	C.	Equivalent units of direct material                     401,000 Equivalent units of direct labor                     378,350 Equivalent units of overhead                     382,350 Costs per equivalent unit $0.9439 Transferred to Finished Goods $367,657 Total Ending Work in Process $10,123 Total Cost Allocation $558,160
	D.	Equivalent units of direct material                     425,000 Equivalent units of direct labor                     395,350 Equivalent units of overhead                     398,350 Costs per equivalent unit $0.9539 Transferred to Finished Goods $367,647 Total Ending Work in Process $220,323 Total Cost Allocation $587,170
	E.	Equivalent units of direct material                     400,000 Equivalent units of direct labor                     364,350 Equivalent units of overhead                     322,350 Costs per equivalent unit $0.9439 Transferred to Finished Goods $347,977 Total Ending Work in Process $331,763 Total Cost Allocation $678,430

Answer 1

Answer

• Correct Answer = Option ‘a’

A.

Equivalent units of direct material                     402,000 Equivalent units of direct labor                     389,650 Equivalent units of overhead                     389,650 Costs per equivalent unit $0.962 Transferred to Finished Goods $368,446 Total Ending Work in Process $10,449 Total Cost Allocation $378,895

--Working

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Labor + Overhead	EUP – Labor + Overhead
Units TRANSFERRED	383,000	100%	383,000	100%	383,000
Units of ENDING WIP	19,000	100%	19,000	35%	6,650
Equivalent Units of Production			402,000		389,650
COST per EUP			Material		Conversion
Cost of Beginning WIP			$          46,100.00		$                                  50,000.00
Cost incurred during the period			$          85,800.00		$                                197,000.00
Total Costs		Costs	$        131,900.00	Costs	$                                247,000.00
Equivalent units of production		EUP	402,000	EUP	389,650
Cost per EUP			$              0.32811		$                                      0.63390
TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	383,000	$                      0.33	$        125,662.30
- Conversion	383,000	$                      0.63	$        242,783.70
Total Cost transferred Out				$            368,446.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	19,000	$                      0.33	$             6,233.90
- Conversion	6,650	$                      0.63	$             4,215.44
Total cost of ending WIP				$              10,449.34
Total costs accounted for					$                                378,895.34