Question

(E16-6 The Cutting Department of Cassel Company has the following production and cost data for July Determine costs, and (LO 3,4), AF Production 1. Transferred out 12,000 units. 2. Started 3,000 units that are 60% complete as to conversion costs and 100% complete as to materials at July 31. Costs Beginning work in process Materials Labor Manufacturing overhead $ -0- 45,000 16,200 18,300 Materials are entered at the beginning of the process. Conversion costs are incurred uni- formly during the process. Instructions (a) Determine the equivalent units of production for (1) materials and (2) conversion costs. (b) Compute unit costs and prepare a cost reconciliation schedule.

Answer 1

Answer :-

E16-6

(a) Determining the equivalent units of production for (1) materials and (2) conversion costsl

	Particulars	Materials	Conversion Costs
	Units transferred out	12,000	12,000
	Work in process, July 31 :-
	Material - 3000 x 100%	3,000
	Conversion - 3,000 x 60%		1,800
	Total equivalent units of Production	15,000	13,800

Note 1:-

It was given that in Production part of Question that 12,000 units were Transferred out and For 3000 units ,100% production is completed for Materials and 60% production is completed for conversion.

(b)Computing unit costs is as follows -

Material unit costs = Direct Materials Cost/ Total equivalent unit of Production of Materials

Direct Materials Cost = $45,000

Total equivalent unit of Production of Materials = 15,000 units

Materials unit costs = $45,000/ 15,000

Materials unit costs = $3

Conversion cost is combination of Direct Labor cost and Manufacturing Overhead Cost.

Conversion unit costs = (Direct Labor cost + Manufacturing Overhead Cost )/ Total equivalent unit of Production of Labor

Direct Labor cost = $16,200

Manufacturing Overhead Cost = $18,300

Total equivalent unit of Production of Labor = 13,800 unit

Conversion unit costs = ($16,200 + $18,300) / 13,800 unit

Conversion unit costs = $34,500 /13,800 unit

Conversion unit costs = $2.5

.

Preparation of Cost Reconciliation Schedule

Cost Reconciliation
Costs accounted for -
Transferred out (Note 2)		$66,000
Work in process, July 31
Materials cost (Note 2)	$9,000
Conversion costs (Note 2)	$4,500	$13,500
Total costs		$79,500

Note 2 :-

Transferred out = Transferred out units × ( Materials unit costs + Conversion unit costs )

Transferred out unit = 12,000 units

Materials unit costs = $ 3

Conversion unit costs = $2.5

Transferred out = 12,000 units × ($3 + $2.5)

Transferred out = 12,000 units × $5.5 = $66,000

Materials cost = Work in progress Materials × Materials unit costs

Work in Progress Materials = 3,000 unit

Materials cost = 3,000 units × $3

Materials cost =$9,000

Conversion cost = work in progress conversion × Conversion unit costs

Work in Progress conversion= 1,800 units

Conversion cost = 1,800 unit × $2.5

Conversion cost= $4,500

.

As HOMEWORKLIB rule for multiple questions, we can only give answer to First question.