Question

P21-1B Rivers Corporation manufactures water skis through two processes: Molding and Packaging. In the Molding Department, fiberglass is heated and shaped into the form of a ski. In the Packaging Department, the skis are placed in cartons and sent to the finished goods warehouse. Materials are entered at the beginning of both processes. Labor and manufacturing overhead are incurred uniformly throughout each process. Production and cost data for the Molding Department for January 2012 are presented below. Production Data January Beginning work in process units Units started into production 42,500 Ending work in process units 2,500 Percent complete ending inventory 40% Cost Data Materials $510,000 Labor 96,000 Overhead 150,000 Total $756,000 Instructions (a) Compute the physical units of production. (b) Determine the equivalent units of production for materials and conversion costs. (c) Compute the unit costs of production. (d) Determine the costs to be assigned to the units transferred out and in process. (e) Prepare a production cost report for the Molding Department for the month of January. 4.30

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer Part 1) Physical units of Production Units to be accounted for Physical Units Units in beginning inventory Units started into production 42500 Total Units to be accounted for 42500 Units accounted for Units completed and transferred out (42500-2500) 40000 Units in ending work in process 2500 Total units accounted for 42500 Part 2) Equivalent units of Material and Conversion Cost Particulars Physical Units Material Conversion Cost Units completed and transferred out (42500-2500) 40000 40000 40000 (40000*100%) |(40000*100%) Units in ending work in process 2500 2500 1000 (2500*100%) (2500*40%) Equivalent units 42500 42500 41000 Thus the correct answer Material Conversion Cost Equivalent units 42500 41000

5 Part 3) Cost incurred during the period Total cost to be accounted for 1 Equivalent units 2 Equivalent cost per unit Statement for calculation of unit cost Material Conversion Cost Unit Cost 510000 246000 510000 246000 42500 41000 4 Thus the correct answer unit cost per equivalent unit = $ 18 5 5 Part 4) 7 Cost assigned to units transferred out (40000*18) 3 Cost of ending work in process ((2500*12)+(1000*6) Total Cost accounted for 720000 36000 756000 1 Part 5) By combining all of the above 4 parts, production cost report will be formed for molding department, as these are the only 4 parts of production cost report 3 Thank You