Question

MANAGERIAL ACCOUNTING HANDOUT PROBLEM 6 Score Name Section Problem (10 points). Britten Company manufactures room air conditioners. The company uses a process cost system to accumulate production costs and allocate them to finished goods and work in process inventory. For the month of May of the current year, the company started with 1,500 units in work in process inventory and started on 3,500 additional units during the month. At the end of May, there were 600 units that remained uncompleted. During the month of May, the company incurred direct materials cost of $364,000 and direct labor cost of $136,000. Manufacturing overhead is applied to production at a predetermined rate of 80% of direct materials cost. The beginning work in process inventory contained direct materials cost of S86,000 and conversion costs of S102,000. The production process involves adding materials at various stages during the manufacturing process. Conversion costs are added uniformly during the production process. The beginning work in process inventory was 75% complete as to direct materials and 60% complete as to conversion costs. The ending work in process was 60% complete as to direct materials and 45% complete as to conversion costs. The company uses a FIFO cost flow assumption in assigning costs to production and preparing its internal management reports. REQUIRED: Prepare a cost of production report for Britten Company for the month of May using the attached schedules, Round your computations for costs per equivalent unit to five decimal places. Round all dollar amounts to the nearest whole dollar BRITTEN COMPANY SCHEDULE OF PHYSICAL AND EQUIVALENT UNITS FIFO COST METHOD FOR MONTH OF MAY Physical Units Equivalent Units Direct Conversion Materials Costs Units To Account For:

Answer 1

		Material	Conversion Costs
Units to account for
Beginning Work in process	1500
Units started	3500
Total Units to account for	5000
Units accounted for
Inventory in Process, Beginning	1500	375	600
Started and completed	2900	2900	2900
Units transferred	4400	3275	3500
Equivalent units in ending WIP	600	360	270
Total units accounted for	5000
Equivalent units of production		3635	3770
	Material	Conversion Costs
Cost added during the production	$       364,000	$      427,200
Equivalent units of production	3635	3770
Cost per Equivalent unit	$         100.14	$        113.32
	Material	Conversion Costs	Total
Inventory in Process, Beginning	$         86,000	$      102,000	$      188,000
Costs incurred	$       364,000	$      427,200	$      791,200
Total Costs to be accounted for			$      979,200
	Material	Conversion Costs	Total
Costs allocated
Inventory in Process, Beginning	$         86,000	$      102,000	$      188,000
To completed beginning inventory	$         37,552	$        67,989	$      105,541
Total Cost of Work in Process	$       123,552	$      169,989	$      293,541
Started and completed	$       290,398	$      328,616	$      619,014
Completed and Transferred	$       413,949	$      498,606	$      912,555
Inventory in Process, Ending	$         36,050	$        30,595	$        66,645
Total Costs accounted for			$      979,200