Question

Pukalani Filters produces an air filter for use in jet aircraft. Parts are added at several points in the production process. In August, production began with 540 filters in Work in Process, 70 percent complete as to materials and 80 percent complete as to labor and overhead. During the month, an additional 2,480 units were started into production. 700 filters were in Work in Process at the end of the month, and they were 50 percent complete as to materials and 40 percent complete as to labor and overhead.

Cost Information for August	Beginning Work in Process Inventory	Costs Added in August
Direct material	$46,100	$223,570
Direct labor	11,800	63,600
Manufacturing overhead	72,200	403,600
Total	$130,100	$690,770

a. Calculate the cost per equivalent unit for each of the three cost items and in total.

b. Solve for the cost of items completed and solver for cost of ending Work in Process.

c. Reconcile the sum of the two costs in part b to the sum of beginning Work in Process and costs added in August.

Beginning work in process	$
Cost added
Total	$
Cost of items completed	$
Cost of ending WIP
Total	$

Answer 1

Answer

• All working forms part of the answer
• Workings

Units Reconciliation
Units to account for:
Beginning WIP	540
Units started this period	2,480
Total Units to account for	3,020
Total Units accounted for:
Completed & Transferred out	2,320 [3020 – 700]
Ending WIP	700
Total Units accounted for	3,020

• Requirement ‘a’

--Working

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	2,320	100%	2,320	100%	2,320
Units of ENDING WIP	700	50%	350	40%	280
Equivalent Units of Production			2,670		2,600

--Answer

COST per EUP			Material		Conversion
Cost of Beginning WIP			$          46,100.00		$                                  84,000.00
Cost incurred during the period			$        223,570.00		$                                467,200.00
Total Costs		Costs	$        269,670.00	Costs	$                                551,200.00
Equivalent units of production		EUP	2,670	EUP	2,600
Cost per EUP			$         101.00= ANswer		$                                 212.00 = Answer

• Requirement ‘b’

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	2,320	$                 101.00	$       234,320.00
- Conversion	2,320	$                 212.00	$        491,840.00
Total Cost transferred Out				$            726,160.00

Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	350	$                 101.00	$          35,350.00
- Conversion	280	$                 212.00	$          59,360.00
Total cost of ending WIP				$              94,710.00

• Requirement ‘c’

Beginning WIP = $ 130,100
Cost added = $ 690,770
Total = $ 820,870

Cost of Items completed = $ 726,160
Cost of ending WIP = $ 94,710
Total = $ 820,870