Question

Galaxy Manufacturing Company makes golf balls to be distributed and sold at local golf clubs.

The golf balls have special features that increase distance and speed at the driving range. The

company uses a process costing system to accumulate product costs as the golf balls move

through the two stages of production: molding the rubber into cases and stamping. All

materials are added at the beginning of both molding and stamping processes, while conversion

costs are applied evenly throughout the process.

At the beginning of September, the Molding Department had 1,000 golf balls in process

that were 50% complete. The company had incurred $1,300 in direct materials cost and $1,250

in conversion cost to make them. During the month, the department added $13,195 more of

direct materials and $32,875 in conversion costs. A total of 9,150 golf balls were finished during

September and transferred to the Stamping Department. At the end of the month, 2,000 golf

balls that were 30% complete remained in the Molding Department.

Timmy Woods, the CFO of Galaxy Manufacturing Company, needs the following calculations:

a)

Calculate the number of golf balls started in the Molding Department during September.

b)

Calculate the equivalent units of production for the Molding Department during

September. (Hint: Materials equivalent units and conversion equivalent units will not be

the same.)

c)

What was the ending balance in the Molding Department’s Work in Process Inventory

account in dollars?

d)

How much cost was transferred from the Molding Department to the Stamping

department during September?

e)

Reconcile both the physical units and the product costs for the Molding Department in

September.

Answer 1

		Units
Reconciliation of Units
A	Opening WIP	1,000
B (balancing Figure)	Introduced	10,150
C=A+B	TOTAL	11,150
D	Transferred	9,150
E=C-D	Closing WIP	2,000

Requirement A

Number of golf balls started= 10,150

Requirement B

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	9,150	100%	9,150	100%	9,150
Closing WIP	2,000	100%	2,000	30%	600
Total	11,150	Total	11,150	Total	9,750

	Material	Conversion
Equivalent Units of Production	11,150	9,750

Requirement C

Working

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$                 1,300	$                   1,250	$             2,550
Cost incurred during period	$              13,195	$                32,875	$           46,070
Total Cost to be accounted for	$              14,495	$                34,125	$           48,620
Total Equivalent Units	11,150	9,750
Cost per Equivalent Units	$            1.30	$              3.50

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP
		Units	Cost Allocated
Material	$     1.30	2,000	$ 2,600
Conversion Cost	$     3.50	600	$ 2,100
TOTAL	$        48,620	TOTAL	$   4,700

Requirement D

Statement of cost
Cost	Equivalent Cost/unit	Transferred
		Units	Cost Allocated
Material	$     1.30	$             9,150	$    11,895
Conversion Cost	$     3.50	$             9,150	$    32,025
TOTAL	$        48,620	TOTAL	$    43,920

Requirement E

Reconciliation
Cost to be accounted for
Beginning Work In Progress:
Material	$    1,300.00
Conversion Cost	$    1,250.00	$           2,550.00
Cost incurred during period:
Material	$ 13,195.00
Conversion Cost	$ 32,875.00	$        46,070.00
Total Cost to be accounted for				$     48,620.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	9,150	$ 1.30	$          11,895.00
Conversion Cost	9,150	$ 3.50	$          32,025.00
				$     43,920.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	2,000	$   1.30	$             2,600.00
Conversion Cost	600	$ 3.50	$             2,100.00
				$       4,700.00
Total Cost accounted for				$     48,620.00