Question

Washington, Inc., makes three models of motorized carts for vacation resorts, X-10, X-20, and X-40. Washington manufactures the carts in two assembly departments: Department A and Department B. All three models are processed initially in Department A, where all material is assembled. The X-10 model is then transferred to finished goods. After processing in Department A, the X-20 and X-40 models are transferred to Department B for final assembly, and then transferred to finished goods.

There were no beginning work-in-process inventories on April 1. Data for April are shown in the following table. Ending work in process is 25 percent complete in Department A and 60 percent complete in Department B. Conversion costs are allocated based on the number of equivalent units processed in each department.

	Total			X-10			X-20			X-40
Units started					500			300			200
Units completed in Department A					400			260			180
Units completed in Department B								225			165
Materials	$	450,000		$	75,000		$	135,000		$	240,000
Conversion costs:
Department A	$	264,000
Department B		42,000
Total conversion costs	$	306,000

Required:

a. What is the unit cost of each model transferred to finished goods in April?

b. What is the balance of work-in-process inventory on April 30 for Department A? Department B?

Problem 8-66 (Static) Operation Costing: Work-in-Process Inventory (LO 8-8) Washington, Inc., makes three models of motorized carts for vacation resorts, X-10, X-20, and X-40. Washington manufactures the carts in two assembly departments: Department A and Department B. All three models are processed initially in Department A, where all material is assembled. The X-10 model is then transferred to finished goods. After processing in Department A, the X-20 and X-40 models are transferred to Department B for final assembly, and then transferred to finished goods. There were no beginning work-in-process inventories on April 1. Data for April are shown in the following table. Ending work in process is 25 percent complete in Department A and 60 percent complete in Department B. Conversion costs are allocated based on the number of equivalent units processed in each department. Units started Units completed in Department A Units completed in Department B Materials Total X-10 X-20 X-40 500 300 200 400 260 180 225 165 $450,000 $ 75,000 $135,000 $240,000 Conversion costs: Department A Department B Total conversion costs $264,000 42,000 $306,000 Required: a. What is the unit cost of each model transferred to finished goods in April? b. What is the balance of work-in-process inventory on April 30 for Department A? Department B? Complete this question by entering your answers in the tabs below. Required A Required B What is the unit cost of each model transferred to finished goods in April? Product Unit Cost X-10 X-20 X-40

Answer 1

ANSWER

As per the given question,

The solution to this problem is to apply process costing methods for the conversion costs and then add the cost of materials for each product. Because there is no beginning work-in-process inventory, FIFO and weighted-average process costing gives the same results a. The material costs per unit are: Material Cost Number of Units Unit Material Cost Product $75,000 500 150 X-10 300 X-20 135,000 450 X-40 240,000 200 1,200

The conversion costs per equivalent unit are: Department A Conversion Costs Physical Units Equivalent Units

Flow of units: Units to be accounted for: Beginning WIP inventory -0- Units started this perioda 1,000 1,000 Total units to account for Units accounted for: Completed and transferred outb 840 840 Units in ending inventoryc 160 Conversion costs (160 x 25%) Total units accounted for 1,000 880 40

a 1,000 units 500 X-10300 X-20 200 X-40 b 840 units 400 x-10+ 260 X-20 180 X-40 160 units 1,000 units started 840 units transferred out

Total Conversion Costs Flow of costs: Costs to be accounted for $ -0 Costs in beginning WIP inventory -0- Current period costs 264,000 264,000 $ 264,000 $ 264,000 Total costs to be accounted for Cost per equivalent unit Conversion costs ($264,000 880) 300

Department B: Conversion Costs Physical Units Equivalent Units Flow of units:

Units to be accounted for Beginning WIP inventory -0- Units started this perioda 440 Total units to account for 440 Units accounted for Completed and transferred outb 390 390 Units in ending inventoryc 50 Conversion costs (50 x 60%) Total units accounted for 440 420 30

a 440 units 260 X-20 + 180 X-40 b 390 units 225 X-20 165 X-40 c 50 units 440 units started 390 units transferred out

Total Conversion Costs Flow of costs: Costs to be accounted for: Costs in beginning WIP inventory $ $ -0- -0- Current period costs 42,000 42,000 $ 42,000 $ 42,000 Total costs to be accounted for Cost per equivalent unit Conversion costs ($42,000 420) 100

Cost of units transferred to finished goods: Unit Unit Department A Cost Unit Department B Cost Product Material Cost Unit Cost X-10 $150 $300 $-0- 450 X-20 450 300 100 850 X-40 1,200 300 100 1,600

b. Work-in-Process Ending Inventory Balances are: Department A:

Material cost Number of Units Unit Cost Total Cost |$ 15,000 $150 X-10 100 X X-20 40 450 18,000 24,000 X-30 1,200 X Total material cost $57,000 12,000 Conversion costs 40 300 X $69,000 Total 20

DEPARTMENT-B

Material cost Number of Units Unit Cost Total Cost x $450 X-20 35 15,750 x1,200 X-30 15 18,000 Total material cost 33,750 Conversion costs x300 From Dept. A 50 15,000 From Dept. B x100 3,000 30 Total $51,750

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