Question

Please solve and help me understand managerial

CONNECTICUT COMPANY ..... manufactures makes and sells pies. Here's how it works: Basically, they buy premade frozen pies, add materials in the form of their own patented icing and spice coating. The conversion consists of a defrost/baking assembly line. Upon completion the move to the boxing department. Case One: For a moment, let's assume that the special spices are sprinkled in evenly as the baking is taking place. At the start of the period, there were 20,000 ples still in process which were already 25% complete. These pies had costs of $42,776 associated with them. 85,000 new pies entered were started during the period. At the end of the period, 12,000 pies were in process, 70% complete. $160,024 of costs where incurred during the current period. The total costs to account for, therefore, were $202,800. Questions: 1) Complete an accounting for the PHYSICAL units (part 1 of production report). How many PHYSICAL UNITS need to be accounted for? If 12,000 were still in EWIP, how many were finished? Of the ones that were finished, how many were from the BWIP? How many were also started during the period? 2) Compute the equivalent units of production for the period. In other words, IN TERMS OF WHOLE PIES, how much work did we ACTUALLY do (not physical units). 3) Before we allocate any costs, we have a total of $202,800 that must go to either one of 2 different places... where are these costs going? (what are the cost objects?) 4) How much of the $202,800 can we TRACE directly to one of the cost objects? How much is left that needs to be allocated? 5) What was the unit cost of a WHOLE ple for the period? (Cost per equivalent unit) 6) Let's apply the rate. How many equivalent units in the EWIP? How much cost goes there? How many equivalent units were completed and transferred out? How much cost is allocated there?

Answer 1

1.

	Physical Units
Beginning work in process	20000
Started during the period	85000
Total units to be accounted for	105000
Finished from beginning work in process	20000
Started and finished	73000
Total units finished during the period	93000
Ending work in process	12000
Total units accounted for	105000

2.

	Equivalent Units
Beginning work in process (75% x 20000)	15000
Started and finished	73000
Ending work in process (70% x 12000)	8400
Total equivalent units of production for the period	96400

3. The costs are going to:

Finished units

Ending work in process

4. The $42776 can be traced directly to the finished units. The remaining $160024 needs to be allocated.

5. Unit cost of a whole pie for the period: $1.66

Costs incurred during the period	160024
Equivalent units of production	96400
Cost per equivalent unit $	1.66

6.

	Equivalent Units	Unit Cost	Total Cost
Ending work in process	8400	1.66		13944
Completed and transferred out	88000	1.66	146080
Cost of beginning work in process			42776
Total cost of completed and transferred out				188856
Total cost accounted for $				202800