Question

Use below information for Questions 10 to 13: The smelting department of Company X has following production and cost data for September: • Production: Beginning work in process 200 units that are 100% complete as to materials and 76% complete as to conversion costs; units started into production 1,000 units; ending work in process 260 in units that are 100% complete as to materials and 54% complete as to conversion costs. Manufacturing costs: Beginning work in process TL8,600 materials, TL9,240 labor and TL2,600 manufacturing overhead costs. In current period, TL50,600 worth of materials, TL25,100 worth of labor and TL36,000 worth of manufacturing overhead costs are incurred. Q-10) Compute the material cost portion of the transferred out inventory if the company uses WA method to compute equivalent units. Q-11) Compute the conversion cost portion of the transferred out inventory if the company uses FIFO method to compute equivalent units. method to compute equivalent units. Q-12) Compute the material cost portion of the ending inventory if the company uses FIFO method to compute equivalent units. Q-13) Compute the conversion cost portion of the ending inventory if the company uses WA method to compute equivalent units.

Answer 1

Answer is given below step wise and also answers are highlited in grey color in working sheets

Q10) Material portion of transferred out inventory as per WA method 46,373 Q11) Conversion cost portion of transferred out inventory as per FIFO method 63,700 Q12) Material portion of ending inventory as per FIFO method 13,156 Q13) Conversion cost portion of ending inventory as per WA method 9,479 A. Weighted Average Cost method Equivalent Units Physical Units Material Completed Conversion Cost Completed 200 step 1 Units to be accounted for Beginning WIP Inventory Units Started During Period Total Units To Account for 1,000 1,200 Units accounted for Units Completed during Period: From Beginning WIP in Inventory Units started and completed during Period Total units completed during period Units in Ending WIP Inventory step 2 Total Units To Account for 200 740 940 260 1,200 100% 100% 940 260 1,200 100% 54% 940 140 1,080 Unit Cost Analysis Schedule Total Material Conversion Cost Cost to Account for Cost from Beginning WIP Inventory Current Period Costs step 3 Total cost 8,600 50,600 59,200 11,840 61,100 72,940 20,440 111,700 132,140 Divided by Equivalent units 1,200 1,080 step 4 Cost per equivalent unit 49.33 67.51 116.85 In Average cost method Total cost of Opening Work in process and current period cost is divided by equivalent units Cost Summary Schedule Direct Material Conversion Cost Total Costs step 5 46,373 Costs Accounted For Units Started and completed during period Direct Material Conversion cost Total costs of units completed and transferred out 46,373 63,461 63,461 46,373 63,461 109,835 12,827 Ending Work in process Inventory Direct Material Conversion cost Total Cost of Ending Work in Process Total Costs Accounted for 12,827 9,479 22,305 132,140 9,479 9,479 72,940 12,827 59,200 In Average Cost method Beginning WIP inventory is not valued separately Cost is averaged out and added to units started and completed during the period B. FIFO Method Equivalent Units Physical Units Material Completed Conversion Cost Completed step 1 Units to be accounted for Beginning WIP Inventory Units Started During Period Total Units To Account for 200 1,000 1,200 24% Units accounted for Units Completed during Period: From Beginning WIP in Inventory Units started and completed during Period Total units completed during period Units in Ending WIP Inventory step 2 Total Units To Account for 100% 740 100% 200 740 940 260 1,200 100% 54% 260 1,000 140 928 Unit Cost Analysis Schedule Material Conversion Cost Total Costs Cost to Account for Cost from Beginning WIP Inventory Current Period Costs step 3 Total cost Current Period Costs Divided by Equivalent units ( Current period Cost only) step 4 Cost per equivalent unit 8,600 50,600 59,200 50,600 11,840 61,100 72,940 61,100 20,440 111,700 132,140 1,000 50.60 928 65.81 116.41 Cost Summary Schedule Direct Material Conversion Cost Total Costs step 5 Costs Accounted For Costs from Beginning WIP Inventory 8,600 11,840 20,440 3,159 3,159 To Complete Beginning WIP Inventory Direct Material Conversion cost Units Started and completed during period Direct Material Conversion cost Total costs of units completed and transferred out 37,444 37,444 48,701 48,701 46,044 63,700) 109,744 13,156 Ending Work in process Inventory Direct Material Conversion cost Total Cost of Ending Work in Process Total Costs Accounted for 13,156 9,240 22,396 132,140 9,2401 9,240 72,940 13,156 59,200