Question

2) Darver Inc. uses a process costing system. The following data concern the operations of the company's first processing department for a recent month. 100 80% 60% Work in process, beginning: Units in process.............. Percent complete with respect to materials............. Percent complete with respect to conversion ........... Costs in the beginning inventory: Materials cost. Conversion cost...... $376 $2,376 Units started into production during the month... Units completed and transferred out................ 21,000 20,400 Costs added to production during the month: Materials cost Conversion cost............. $93,645 $825,531 700 Work in process, ending: Units in process................ Percent complete with respect to materials............ Percent complete with respect to conversion ............ 70% 50% Required: Using the FIFO and WA methods: a. Determine the equivalent units of production for materials and conversion costs. b. Determine the cost per equivalent unit for materials and conversion costs. c. Determine the cost of ending work in process inventory. d. Determine the cost of units transferred out of the department during the month.

Answer 1

Answer is given below for both methods

Explanation is also given to make the concepts clear

FIFO Method Schedule of Physical and Equivalent Units - FIFO Physical Units % Completed Equivalent Units Direct % Material completed Conversion cost Analysis of Physical Flow of Units Units to be accounted for Beginning WIP Inventory Units Started Total Units To Account for 100 21.000 21,100 20% 100% 20 20,300 40% 100% 40 20,300 Units accounted for Units Completed during Period: From Beginning WIP in Inventory Units started and completed during Period Units completed and transferred out Units in Ending WIP Inventory Total Units Accounted for Total Equivalent units 100 20,300 20,400 700 21,100 70% 490 50% 350 20,810 20,690 Unit Cost Analysis Schedule-FIFO Method Direct Material Conversion Cost Total Costs Cost to Account for Opening Work in process $376 $2,376 $2,752 Current Period Costs Total cost $93,645 $93,645 $825,531 $825,531 $919,176 $921,928 Divided by Equivalent units Cost per equivalent unit (Current period cost /Equivalent units) 20,810 $4.500 20,690 $39.900 $44.400 Note: In FIFO method only current period cost is divided by equivalent units to arrive at cost per equivalent unit Analysis of Total Cost Production Cost Worksheet Direct Material Conversion Cost Total Costs Units Started and completed during period Opening WIP cost Cost incurred on Opening Work in process during the month Direct Material (20,300 * $4.5) Conversion cost (20,300 * $39.90) Total costs of units completed and transferred to Finished Goods $376 $90 $91,350 $2,376 $1,596 $2,752 1,686 equivalent unit X EUP $91,350 $809,970 $905,758 $809,970 $813,942 $91,816 $2,205 Ending Work in process Inventory Direct Material (490 * $4.5) Conversion cost (350 * $39.90) Total Cost of Ending Work in Process Total Costs Accounted for $2,205 $94,021 $13,965 $13,965 $827,907 $2,205 $13,965 $16,170 $921,928 Weighted Average cost method Schedule of Physical and Equivalent Units- Weighted Average Physical Units Equivalent Units % Direct % Completed Material completed Conversion Cost Analysis of Physical Flow of Units Units to be accounted for Beginning WIP Inventory Units Started Total Units To Account for 100 21,000 21.100 Units accounted for Units Completed during Period: From Beginning WIP in Inventory Units started and completed during Period Units completed and transferred out Units in Ending WIP Inventory Total Units Accounted for Total Equivalent units 100 20,300 20,400 700 21,100 100% 70% 20,400 490 100% 50% 20,400 350 20,890 20,750 Unit Cost Analysis Schedule-Weighted Average Direct Material Conversion Cost Total Costs Cost to Account for Opening Work in process Current Period Costs Total cost $2,752 $376 $93,645 $94,021 $2,376 $825,531 $827,907 $919,176 $921,928 Divided by Equivalent units Cost per equivalent unit (Current period cost/Equivalent units) 20,890 $4.501 20,750 $39.899 $44.400 Note: In weighted average method Opening WIP cost and Current period cost is added and then divided by equivalent units for EUP Analysis of Total Cost Production Cost Worksheet Direct Material Conversion Cost Total Costs Units Started and completed during period Cost incurred on Opening Work in process during the month Direct Material (20,400 * $4.501) Conversion cost (20,400 * $39.899) $91,816 $91,816 $813,942 $813,942 Total costs of units completed and transferred to Finished Goods | $91,816 $813,942 $905,758 $2,205 Ending Work in process Inventory Direct Material (490 * $4.501) Conversion cost (350 * $39.899) Total Cost of Ending Work in Process Total Costs Accounted for $2,205 $13,965 $16,170 $921,928 $13,965 $13,965 $827,907 $2,205 $94,021