Question

Use below information for Questions 1 to 4:

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 87% complete as to conversion costs; units started into production 1,000 units; units transferred out to next department

970 units; ending work in process are 100% complete as to materials and 43% complete as to conversion costs.

• • Manufacturing costs: Beginning work in process TL8,300 materials, TL9,260 labor and TL2,300 manufacturing overhead costs. In current period, TL50,700 worth of materials, TL25,600 worth of labor and TL37,000 worth of manufacturing overhead costs are incurred.
• Compute the material cost portion of the ending inventory if the company uses WA method to compute equivalent units.
• Compute the conversion cost portion of the ending inventory if the company uses FIFO method to compute equivalent units. method to compute equivalent units.
• Compute the material cost portion of the transferred out inventory if the company uses FIFO method to compute equivalent units.
• Compute the conversion cost portion of the transferred out inventory if the company uses WA method to compute equivalent units.

Answer 1

Compute the material cost portion of the ending inventory if the company uses WA method to compute equivalent units.	$        11,308
Compute the conversion cost portion of the ending inventory if the company uses FIFO method to compute equivalent units. method to compute equivalent units.	$          6,918
Compute the material cost portion of the transferred out inventory if the company uses FIFO method to compute equivalent units. (8300+39039)	$        47,339
Compute the conversion cost portion of the transferred out inventory if the company uses WA method to compute equivalent units.	$        67,298

Calculation

Conversion Cost is sum of the direct labor cost and overhead

Company X
Smelting Department production Report
Weighted average Method
Month ended September 30
Summary of Physical units
Units in beginning WIP inventory			200
Units started during month			1000
Total unit to be accounted for			1200
Units completed and transferred out			970
Units in ending WIP inventory (1200-970)			230
Total unit accounted for			1200
Equivalent Units of production
Particulars	Physical units	Direct material		Conversion Cost
		%	units	%	units
units in beginning WIP inventory	200	100%	200.00	100%	200.00
Units in Started and completed (970-200)	770	100%	770.00	100%	770.00
units in ending WIP inventory	230	100%	230.00	43%	98.90
Equivalent Units of production			1,200.00		1,068.90
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	$           8,300	$         11,560	$          19,860
Cost incurred during Month (Add)	$         50,700	$         62,600	$        113,300
total cost to be accounted for	$         59,000	$         74,160	$        133,160
cost per Equivalent Unit
total cost to be accounted for	$         59,000	$         74,160
Divided by: Equivalent Units of production	1,200.00	1,068.90
Cost per Equivalent Unit	$    49.16667	$    69.37974	$   118.54640
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
units completed and transferred out	970	970
Cost per Equivalent Unit	$    49.16667	$    69.37974
cost assigned to units transferred out	$         47,692	$         67,298	$        114,990
cost assigned to units ending work in progress
equivalent units in ending WIP inventory	230.00	98.90
Cost per Equivalent Unit	$    49.16667	$    69.37974
cost assigned to units ending work in progress	$         11,308	$           6,862	18,170
Total cost assigned			133,160

	Company X
	Smelting Department production Report
	First in First out (FIFO) Method
	Month ended September 30
	Summary of Physical units
	Units in beginning WIP inventory			200
	Units started during month			1000
	Total unit to be accounted for			1200
	Units completed and transferred out			970
	Units in ending WIP inventory (1200-970)			230
	Total unit accounted for			1200
	Equivalent Units of production
	Particulars	Physical units	Direct material		Conversion Cost
			%	units	%	units
	units in beginning WIP inventory	200	0%	-	13%	26.00
	Units in Started and completed (970-200)	770	100%	770.00	100%	770.00
	units in ending WIP inventory	230	100%	230.00	43%	98.90
	Equivalent Units of production			1,000.00		894.90
	Summary of cost to be accounted
		Direct material	Conversion Cost	Total
	Cost in beginning WIP	$            8,300	$          11,560	$          19,860
	Cost incurred during Month (Add)	$         50,700	$          62,600	$        113,300
	total cost to be accounted for	$         59,000	$          74,160	$        133,160
	cost per Equivalent Unit
	Cost incurred during Month	$         50,700	$          62,600
	Equivalent Units of production	1,000.00	894.90
	Cost per Equivalent Unit	$     50.70000	$     69.95195	$   120.65195
	Assign costs to units transferred out and units in ending WIP inventory
	cost assigned to units transferred out
	Direct material	$            8,300
	Conversion Cost	$         11,560
	Cost in beginning WIP		$          19,860
	Direct material (0*50.7)	$                   -
	Conversion Cost (26*69.95195)	$            1,819
	Cost incurred for complete beginning WIP		$            1,819
	Direct material (770*50.7)	$         39,039
	Conversion Cost (770*69.95195)	$         53,863
	Cost of units in Started and completed		$          92,902
	cost assigned to units transferred out		$        114,581
	cost assigned to units ending work in progress
	Direct material (230*50.7)	$         11,661
	Conversion Cost (98.9*69.95195)	$            6,918
	cost assigned to units ending work in progress		$          18,579
	Total cost assigned		$        133,160

For direct material 100% unit completed in the previous period. It means the remaining 0% completed in this month.

For conversion cost 87% unit completed in the previous period. It means the remaining 13% completed in this month.