Question

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Work in Process—Assembly Department
Bal., 3,000 units, 70% completed	12,480	To Finished Goods, 69,000 units	?
Direct materials, 71,000 units @ $1.5	106,500
Direct labor	202,700
Factory overhead	78,765
Bal. ? units, 35% completed	?

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

1. Cost of beginning work in process inventory completed this period.	$
2. Cost of units transferred to finished goods during the period.	$
3. Cost of ending work in process inventory.	$
4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent.	$

b. Did the production costs change from the preceding period?
Yes

c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?
Increase

Answer 1

Solution:

Assembly Department
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Material	Conversion
Units to be accounted for:
Beginning WIP Inventory	3000
Units started this period	71000
Total unit to be accounted for	74000
Units Accounted for:
Units completed and transferred out
From beginning inventory Material - 0% Conversion - 30%	3000	0	900
Started and completed currently	66000	66000	66000
Transferred to finished goods	69000	66000	66900
Units in ending WIP Material - 100% Conversion - 35%	5000	5000	1750
Total units accounted for	74000	71000	68650

Assembly Department
Computation of Cost per Equivalent unit
Particulars	Total cost	Material	Conversion
Current period cost	$387,965.00	$106,500.00	$281,465.00
Equivalent units		71000	68650
Cost per equivalent unit		$1.50	$4.10

Assembly Department
Producton cost report - FIFO
Particulars	Total cost	Material	Conversion
Cost Accounted for :
Cost assigned to unit transferred out:
Cost from beginning WIP Inventory	$12,480
Current cost added to complete beginning WIP:
Material	$0	$0
Conversion (900 * $4.10)	$3,690		$3,690
Total Cost from beginning inventory	$16,170	$0	$3,690
Current cost of unit started and completed:
Material (66000*$1.50)	$99,000	$99,000
Conversion (66000*4.10)	$270,600		$270,600
Total cost of unit started and completed	$369,600	$99,000	$270,600
Total cost of unit transferred out	$385,770	$99,000	$274,290
Cost assigned to ending WIP:
Material (5000*$1.50)	$7,500	$7,500
Conversion (1750*$4.10)	$7,175		$7,175
Total ending WIP inventory	$14,675	$7,500	$7,175
Total cost accounted for	$400,445	$106,500	$281,465

Refer above production cost report:

a1. Cost of beginning work in process inventory completed this period. = $3,690

a2 : Cost of units transferred to finished goods during the period. = $385,770

a3: Cost of ending work in process inventory = $14,675

a4: Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. = $16,170/ 3000 = $5.39 per unit

Solution b:

Yes, production costs change from the preceding period

Solution c:

If direct material cost per unit did not change then cost per equivalent unit of conversion in beginning WIP = ($12,480 - 3000*1.50) / (3000*70%) = $3.80 per unit

Therefore  conversion costs per equivalent unit increase for the current period.