Kaeding Company manufactures car seats in its Hartford plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department.
Physical Units |
Direct |
Conversion |
|||||
(Car Seats) |
Materials |
Costs |
|||||
Work in process, October 1 |
5,400 |
$ 1,344,600 |
$ 337,190 |
||||
Started during October 20172017 |
21,000 |
||||||
Completed during October 20172017 |
24,500 |
||||||
Work in process, October 31 Superscript |
1,900 |
||||||
Total costs added during October 20172017 |
$4,305,000 |
$2,567,430 |
|||||
Superscript aDegree of completion: direct materials, ?%; conversion costs, 50%.
Superscript bDegree of completion: direct materials, ?%; conversion costs, 70%.
Requirement 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule.
Equivalent Units |
|||
Physical |
Direct |
Conversion |
|
Flow of Production |
Units |
Materials |
Costs |
Work in process beginning |
|||
Started during current period |
|||
To account for |
|||
Completed and transferred out during current period |
|||
Work in process, ending |
|||
Accounted for |
|||
Work done to date |
1. |
For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. |
2. |
What issues should the manager focus on when reviewing the equivalent-unit calculations? |
3. |
For each cost category, summarize total assembly department costs for October 20172017 and calculate the cost per equivalent unit. |
4. |
Assign costs to units completed and transferred out and to units in ending work in process. |
Kaeding Company | |||||
Equivalent Units | |||||
1) | Flow of Production | Physical Units | Direct Material | Conversion | |
Work in Process beginning | 5400 | ||||
Started during the current period | 21000 | ||||
To account for | 26400 | ||||
Completed and transferred out during the current period | 24500 | 24500 | 24500 | ||
Work in Process ending | 1900 | 1900 | 1330 | ||
Account for | 26400 | 26400 | 25830 | ||
Material | Conversion | ||||
Work in Process ending | (1900*100%) | (1900*70%) | |||
2) | To show better performance , a department manager report higher degree of completion as a result understated cost per equivalent units and overstated income. | ||||
3) | Total Production cost | Direct Material | Conversion | ||
Work in process , beginning | $ 16,81,790.00 | $ 13,44,600.00 | $ 3,37,190.00 | ||
Cost added in current period | $ 68,72,430.00 | $ 43,05,000.00 | $ 25,67,430.00 | ||
Total cost to account for | $ 85,54,220.00 | $ 56,49,600.00 | $ 29,04,620.00 | ||
Cost incurred to date=(A) | $ 56,49,600.00 | $ 29,04,620.00 | |||
Equivalent Units=(B) | 26400 | 25830 | |||
Cost per Equivalent units=(A)/(B) | $ 214.00 | $ 112.45 | |||
4) | Assignment of cost | ||||
Completed and transferred out | $ 79,98,059.62 | $ 52,43,000.00 | $ 27,55,059.62 | ||
Ending Work in Process | $ 5,56,160.38 | $ 4,06,600.00 | $ 1,49,560.38 | ||
Total cost accounted for | $ 85,54,220.00 | $ 56,49,600.00 | $ 29,04,620.00 | ||
Assignment of cost | |||||
Completed and transferred out | (24500*$214) | (24500*112.45) | |||
Ending Work in process | (1900*$214) | (1330*$112.45) | |||
Kaeding Company manufactures car seats in its Hartford plant. Each car seat passes through the assembly department and t...
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