Question

Intense Co. manufactures a product that uses two production departments. Units are begun in the Mixing Department and then transferred to the Finishing Department.

Below is information related to Intense Co.’s Mixing Department during the current period:

• The Mixing Department began the period with 10,000 units of beginning inventory, costing $132,000.

o The $132,000 consisted of $90,000 of materials cost and $42,000 of conversion costs.

o The 10,000 units were 60% complete with regard to materials and 40% complete with regard to conversion.

• During the period an additional 90,000 units were started in the Mixing Department.

• Costs added to production during the period consisted of $385,000 of materials and $560,000 of conversion costs.

• As of the end of the period, 20,000 units were still unfinished. The units were 75% complete with regard to materials and 30% complete with regard to conversion costs.

Required For the Mixing Department for the Intense Co.:

1. Using the weighted average method, compute equivalent units of production for materials and for conversion for the current period. (4 points)

2. Compute the cost per equivalent unit for materials and for conversion costs for the current period. (2 points)

3. Assign costs to units transferred out to the Finishing Department and to units remaining in ending inventory. (2 point)

4. Prepare a Cost Reconciliation Report for the Mixing Department. (4 points)

Answer 1

		Physical Units		Equivalent Units
				Materials	Conversion
	Beginning Inventory	10000
	Started during the period	90000
	To account for	100000
	Completed and Transferred Out	80000		80000	80000
	Ending Inventory	20000		15000	6000
Requirement -1	Units accounted for (Equivalent      units)	100000		95000	86000
	%Ending Inventory complete			75%	30%
Requirement -2	Cost per equivalent unit					Total
	Beginning Inventory Costs			90,000.00	42,000.00	132,000.00
	Costs added			385,000.00	560,000.00	945,000.00
	Total costs to date			475,000.00	602,000.00	1,077,000.00
	Equivalent units			95,000.00	86,000.00
	Cost per equivalent unit			5.00	7.00
Requirement-3	Assignment of costs					Total
	Completed and transferred out Finishing deparment			400,000.00	560,000.00	960,000.00
	Ending Inventory			75,000.00	42,000.00	117,000.00
						1,077,000.00
Requirement-4	Cost reconciliation
	Costs to be accounted for:
	Costs of beginning work in process inventory	$132,000
	Costs added to production during the period	$945,000
	Total cost to be accounted for	$1,077,000
	Costs accounted for as follows:
	Cost of ending work in process inventory	$117,000.00
	Cost of units transferred out	$960,000.00
	Total cost accounted for	$1,077,000.00

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