Question

Vaughan Company manufactures sofas through two departments: Framing and Upholstering. Assume that the company uses the weighted average method of process costing. Part I Below is the cost data for Framing for October. Work in process, October 1 Materials added Conversion costs added Costs transferred out Work in process, October 31 $-0- $450,000 $261,000 $600,000 $111,000 In the framing department, materials are entered at the beginning of the process. Requirements 1. If 3,000 sofas were started into production in October and 500 sofas are in inventory on October 31, what was the unit cost of materials for October in the Framing Department? 2. What was the per unit conversion cost of the sofas transferred to the Upholstering Department? 3. What was the percentage of completion of the units in process on October 31 in the Framing Department? Part II Below is the information for October for the Upholstering Department (other than the cost of the units transferred in from the Framing Department during October). Work in process, October 1 200 units ; $90,450 (Transferred-in costs $48,000; Direct Materials $32,100; Conversion Costs $10,350) Materials added $315,000 Conversion costs added Direct Labor $156,000; MOH rate: 150% of direct labor costs Work in process, October 31 300 units (90% complete with respect to direct materials and 50% complete with respect to conversion work) Requirements Prepare a production cost report for October for the Upholstering Department

Answer 1

Part I
1. Material Cost per unit = $450000 / 3000 = $150 per unit

2. Conversion Cost in Costs transferred out = $600000 - 2500 x 150 = $225000
Conversion Cost per unit = $225000 / 2500 = $90 per unit

3. Conversion Cost in ending Work in Process = $111000 - 500 x 150 = $36000
Percentage Completion = 36000 / (500 x 90) = 80%

Part II

	Physical units	Transferred in	Material	Conversion
Units to account for
Work in Process Beginning	200
Units transferred from framing department	2500
Total units to account for	2700
Units Accounted for
Completed and transferred	2400	2400	2400	2400
Work in Process Ending	300	300	270	150
Total Units Accounted for	2700
Equivalent units		2700	2670	2550
	Material	Conversion	Conversion	Total
Cost of Beginning Work in Process	$        48,000	$        32,100	$        10,350	$            90,450
Cost added during the period	$      600,000	$      315,000	$      390,000	$       1,305,000
Total Cost to account for	$     648,000	$     347,100	$     400,350	$      1,395,450
Equivalent units of Production	2700	2670	2550
Cost per equivalent unit	$        240.00	$        130.00	$        157.00	$            527.00
	Material	Conversion	Conversion	Total
Units Completed and transferred out
Units transferred to next department	2400	2400	2400
Cost per equivalent unit	$        240.00	$        130.00	$        157.00
Cost of units transferred out	$     576,000	$     312,000	$     376,800	$      1,264,800
	Material	Conversion	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	300	270	150
Cost per equivalent unit	$        240.00	$        130.00	$        157.00
Cost of Ending work in Process Inventory	$        72,000	$        35,100	$        23,550	$          130,650
Total Costs Accounted for	$     648,000	$     347,100	$     400,350	$      1,395,450
Reconciliation
Costs to be accounted for :
Cost of beginning work in process inventory	$        90,450
Costs added to the production during the year	$ 1,305,000
Total Costs to be accounted for	$ 1,395,450
Cost of Ending work in Process Inventory	$      130,650
Cost of units transferred out	$ 1,264,800
Total Costs accounted for	$ 1,395,450

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