Question

Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.

Work in process, June 1—50,000 units:
Direct material: 100% complete, cost of	$	142,500
Conversion: 40% complete, cost of		83,200
Balance in work in process, June 1	$	225,700
Units started during June		200,000
Units completed during June and transferred out to finished-goods inventory		210,000
Work in process, June 30:
Direct material: 100% complete
Conversion: 60% complete
Costs incurred during June:
Direct material	$	482,500
Conversion costs:
Direct labor	$	84,500
Applied manufacturing overhead		253,500
Total conversion costs	$	338,000

Required:

Prepare schedules to accomplish each of the following process-costing steps for the month of June. Use the weighted-average method of process costing.

1. Analysis of physical flow of units.

2. Calculation of equivalent units.

3. Computation of unit costs.

4. Analysis of total costs.

Answer 1

1.

Unit to account for	Physical Units
Beginning inventory	50,000
Unit started	200,000
Total units to account for	250,000
Units accounted as
Unit completed and transferred out	210,000
Ending inventory	40,000
Total units accounted as	250,000

2. Equivalent unit

	Physical unit	Direct material	Conversion
Units transferred out	210,000	210,000	210,000
Ending WIP	40,000	40,000	24,000 (40,000*60%)
Total units accounted for	250,000
Total equivalent unit		250,000	234,000

3. Cost per equivalent unit

	Direct material	Conversion	Total
Beginning WIP	$142,500	$83,200	$225,700
Cost added	$482,500	$338,000	$820,500
Total cost	$625,000	$421,200	$1,046,200
Equivalent unit	250,000	234,000
Cost per equivalent unit	$2.5	$1.8	$4.3

4. Cost Reconciliation

	No.of Equivalent units	Cost per equivalent unit	Total cost
Cost of goods completed and transferred	210,000	$4.30	$903,000
Direct material (Ending WIP inventory)	40,000	$2.5	$100,000
Conversion (Ending WIP inventory)	24,000	$1.8	$43,200
Total costs accounted for			$1,046,200