Question

Preferably answered using Excel

II. Process Costing (50 points Our company manufactures Chemical X. Assume the company uses weighted average. Separate direct materials and conversion costs. Chemical X is comprised of two liquids, Liquid A and Liquid B. The formula of Chemical X is 60% Liquid A, 40% Liquid B. 40% of the mixed liquid is added at the beginning of the process; 60% added at the very end. The average cost of the raw materials is $43 per gallon. At the beginning of the month, there was 1,400 gallons in process, 70% through the process (as to conversion costs). The total costs in beginning WIP is $24,080 for materials and $96,760 for conversion costs. During the month, 13,000 gallons were started. Conversion costs were $467,400 for the month. Compute direct material costs (hint use DM EUP under FIFO). At the end of the month, there were 1,600 gallons in process, 60% through the process. Answer each question separately. DO NOT just complete a table - this will result in a zero! a. How many units were started AND completed? Completed? b. Using FIFO, calculate equivalent units produced C. What is the cost of the material added? (hint: use b.). d. Using FIFO, calculate the cost per equivalent unit produced. e. Using FIFO, what is the journal entry for the transferred to finished goods? f. Using FIFO, what are the unit costs? (hint: you should have 2 numbers) 8. Using WA, calculate equivalent units of production. h. Using WA, what is the cost per equivalent unit of production. i. Using WA, what is journal entry for transferred to finished goods? j. Using WA, what is the cost per unit?

Answer 1

Solution:

How many units were started and completed? Completed? - Workings 1 11400 12800 1400 Workiings 1 Units to be accounted for Beginning Work in Process Units Started during the month Total Less: Ending Work In Process Completed Units 13000 14400 1600 А 12800 Started and Completed =Completed Units - Beginning Work in Process =12800-1400 11400

Equivalent Units Produced FIFO (Workings 2) Direct Materials Conversion 12880 12780 Workings 2: Materials Conversion B Units Particulars Beginning Inventory Started and Completed Ending Inventory Equivalent Units % Complete EUP 1400 60% 11400 100% 1600 40% 14400 % Complete EUP 840 30% 420 11400 100% 11400 640 60% 960 12880 12780

What is the cost of Direct Materials added? (Workings 3) 553840 C Workings 3: Cost of Direct Materials added 12880*43 553840

Using FIFO calculate the cost per equivalent unit produced (Workings 4) Direct Materials Conversion 43 36.57 Workings 4: Cost per Equivalent equivalent Current Costs Units unit 553840 12880 43 467400 12780 36.57 Materials (12880*43) Conversion (given)

Journal Entry for the transferred finished goods (Workings 5) Journal Entry Finished Goods Work In Process 1079450 1079450 E Conversion Total 24080 96760 120840 36120 15361 Workings 5: Cost of Goods Manufactured and Transferred out: Materials From Beginning Inventory Current Cost to complete (Beginning EUP * cost per equivalent unit) Cost of units started and completed Cost of Goods Manufactured Units Transferred out Cost per unit 51481 907130 490200 416930 529050 1079450 550400 12800 43 12800 12800 41.33 84.33

F Using FIFO what are the unit cost (Workings 5) Direct Materials Conversion Cost 43 41.33

Using WA Calculate EUP (Workings 6): Materials Conversion Cost 13440 13760 Workings 6 G Weighted Average Materials Conversion Units Particulars Completed and transferred out Ending Inventory Equivalent Units % Complete EUP 12800 100% 1600 40% 14400 % Complete EUP 12800 100% 12800 640 60% 960 13440 13760

Using WA, What is the cost per equivalent unit of prouction Materials Conversion Cost 43.00 41.00 Workings 7: Conversion Direct Material Costs H Total Costs Costs to account for Beginning Work In Process Costs Added During the month Total Costs to account for Divided by: Total Equivalent Units of production Cost per equivakent units 24080 553840 577920 13440 43.00 96760 467400 564160 13760 41.00 120840 1021240 1142080 84.00

Journal Entry 1075200 Finished Goods (12800*43)+(12800*41) Work In Process 1075200

Cost per unit =$43+$41 84.00

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