Question

Equivalent Units of Production and Related Costs The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Work in Process—Assembly Department Bal., 9,000 units, 40% completed 72,360 To Finished Goods, 41,500 units ?

Direct materials, 40,000 units @ $6.80 272,000

Direct labor 80,000

Factory overhead 40,450

Bal., ? units, 30% completed ?

Determine the following:

a. The number of units in work in process inventory at the end of the period. _____ units

b. Equivalent units of production for direct materials and conversion. If an amount is zero or a blank, enter in "0".

Work in Process-Assembly Department Equivalent Units of Production for Direct Materials and Conversion Costs

Whole Units Equivalent Units Direct Materials Equivalent Units Conversion

Inventory in process, beginning ______ ________ ______

Started and completed ______ _______ ______

Transferred to finished goods ______ ______ ______

Inventory in process, ending ______ ______ ______

Total units ______ ______ ______

c. Costs per equivalent unit for direct materials and conversion.

Costs Per Equivalent Unit

Direct Materials $______

Conversion $______

d. Cost of the units started and completed during the period. $_______

Answer 1

Solution

a. Calculation of No. of  units in work in process inventory at the end of the period

=9000 units +40000 units -41500 units

= 7500 Units

b. Equivalent units of production for direct materials and conversion

Work in Process-Assembly Department Equivalent Units of Production for Direct Materials and Conversion Costs Whole Units Equivalent Units Direct Materials Equivalent Units Conversion Inventory in process, beginning 9000 0 5400 Started and completed 32500 32500 32500 Transferred to finished goods 41500 325001 37900 Inventory in process, ending 7500 7500 2250 Total units 49000 40000 40150

Working:

A Nm 4 B 2 Work in Process Assembly Department Equivalent Units of Production for Direct Materials and Conversion Costs Whole Units Equivalent Units Direct Materials Equivalent Units Conversion 5 Inventory in process, beginning 9000 0 =9000*60% 6 Started and completed =B7-B5 =41500-9000 32500 7 Transferred to finished goods 41500 32500 =D5+D6 8 Inventory in process, ending 7500 7500 =7500*30% 9 Total units =B7+B8 =C7+C8 =D7+D8

Solution c) Calculation of Cost per Equivalent unit

Direct Material = $272,000 / 40,000 units = $6.8 per unit

Conversion = ($80,000 + $40,450) / 40,150 units = $3 per unit

Solution d) Cost of the units started and completed during the period

= Total Equivalent cost per units * 32500 unitss

=($6.8 + $3) * 32,500 units

= $9.8 * 32500

=$318,500