Question

Question 4 (20 Marks) Yarra Valley, manufactures convenience foods, including potato chips and corn chips. Production of corn chips occurs in four departments: cleaning, mixing, cooking, and drying and packaging, Consider the drying and packaging department, where direct materials (packaging) are added at the end of the process. Conversion costs are added evenly during the process. The accounting records of a Yarra Valley plant provide the following information for corn chips in its drying and packaging department during a weekly period (week 37): ACCT6004_Assessment 2 Brief_Individual Case Study Page 6 of 10 Conversion Costs $4,020 Physical Transferred Direct Units In Costs Materials (Cases) Beginning work in process 1,200 $26,750 $0 Transferred in during week 37 from 4200 Completed during week 37 4,000 Ending work in process, week 37 1,400 Total costs added during week 37 $91,510 $23,000 Degree of completion transferred in costs, 100%, direct materials, 0%conversion costs, 25%. Degree of completion transferred in costs, 100%, direct material, On, conversion costs, Sos. $27.940 Required: 1. Using the weighted-average method, summarize the total drying and packaging department costs for week 37, and assign total costs to units completed (and transferred out) and to units in ending work in process. 2. Assume that the FIFO method is used for the drying and packaging department. Under FIFO, the transferred-in costs for work-in-process beginning inventory in week 37 are $28,920 (instead of $26,750 under the weighted average method), and the transferred-in costs during week 37 from the cooking department are $93,660 instead of $91,510 under the weighted average method). All other data are unchanged. Summarize the total drying and packaging department costs for week 37 and assign total costs to units completed and transferred out and to units in ending work in process using the FIFO method

Answer 1

1 Conversion Costs Yarra Valley Production Cost Report - Drying and Packaging Department Weighted Average Cost Method Equivalent Units Physical % % Direct % UNITS Transferred -in Units Completed Completed Materials Completed Units to account for: Units in Beginning Work in progress 1,200 Units transferred in from 4,200 Total units to account for Units accounted for: Units Completed and transferred during period 4,000 100% 4,000 100% 4,000 100% Units in Ending WIP Inventory 1,400 100% 1,400 0% 0 50% Total units accounted for 5,400 5,400 4,000 5,400 4,000 700 4,700 Transferred in Direct Materials Conversion Costs Total Costs COSTS Cost to account for: Cost from Beginning WIP Inventory Current Period Costs Total cost to account for $26,750 $91,5101 $118,260 $0 $23,000 $23,000 $4,020 $27,940 $31,960 $30,770 $142,450 $173,220 Divided by Equivalent units Cost per equivalent unit 5,400 $21.90 4,000 $5.75 4,700 $6.80 $34.45 Answer Costs accounted for: Units completed during period Ending Work in process Inventory Total costs accounted for Direct Transferred -in Materials $87,600 $23,000 $30,660 $0 $118,2601 $23,000 Conversion Costs $27,200 $4,760 $31,960 Total Costs $137,800 $35,420 $173,220 Units completed during period = 4,000 units * cost per equivalent unit Ending Work in process Inventory = Equivalent units * cost per equivalent unit 2 Yarra Valley Production Cost Report - Drying and Packaging Department FIFO Cost Method Equivalent Units Physical % Direct Transferred in Conversion Units Completed Completed Materials Completed Costs 1,200 4,200 5,400 UNITS Units to account for: Units in Beginning Work in progress Units transferred in Total units to account for Units accounted for: Units in Beginning Work in progress Units started and completed Units completed and transferred Units in Ending WIP Inventory Total units accounted for 100% 100% 1,200 2,800 75% 100% 900 2,800 100% 2,800 1,200 2,800 4,000 1,400 5,400 100% 0% 50% 1,400 4,200 0 4,000 700 4,400 Transferred -in Direct Materials Conversion Costs Total Costs COSTS Cost to account for: Cost from Beginning WIP Inventory Current Period Costs Total cost to account for $28,9201 $93,660 $122,580 $0 $23,000 $23,000 $4,020 $27,940 $31,960 $32,940 $144,600 $177,540 $144,600 Current Period Costs Divided by Equivalent units Cost per equivalent unit $93,660 4,200 $22.3000 $23,000 4,000 $5.7500 $27,940 4,400 $6.3500 $34.40 Answer Costs accounted for: Transferred -in Direct Materials Conversion Costs Total Costs $28,9201 Cost of units completed and transferred Cost from Beginning WIP Inventory(equivalent units*cost per equivalent unit) Cost incurred on completing opening WIP Total cost of beginning WIP Units completed and started (2,800 units * cost per equivalent unit) Total cost of units completed and transferred out $28,9201 $62,440 $91,360 $0 $6,9001 $6,900 $16, 1001 $23,000 $4,020 $5,715 $9,735 $17,780 $27,515 $32,940 $12,615 $45,555 $96,320 $141,875 A Ending Work in process Inventory (equivalent units*cost per equivalent unit) Total costs accounted for $31,220 $122,580 $0 $23,000 $4,445 $31,960 $35,665 B $177,540 A+B