Question

Four Seasons Company makes snow blowers. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September, the work-in-process is 40 percent complete and at the end of the month it is 60 percent complete for conversion costs. Other data for the month include: 1,000 units 2,500 units 2,500 units Beginning work-in-process inventory Units started Units completed and placed in finished goods Cost added during the period Cost of direct materials Conversion costs Beginning work-in-process costs: Materials Conversion $245,000 $202,400 $175,000 $76,000 Required: A) Determine the equivalent units of production for materials and conversion costs. B) Determine the cost per equivalent unit for materials and conversion costs. C) Prepare a production cost worksheet with supporting of process costing to show amount transferred out of WIP and the amount remaining in ending WIP. (Round to nearest dollar)

Answer 1

Solution A:

Four season Company
Production Cost report
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	1000
Started into Production	2500
Total units to account for	3500
Units accounted for:
Unit completed & Transferred out	2500	2500	2500
Units in ending inventory:	1000
Material (100%)		1000
Conversion (60%)			600
Equivalent units of production	3500	3500	3100

Solution B:

Four Season Company Computation of Cost per equivalent unit
Particulars	Material	Conversion	Total
Opening WIP	$175,000	$76,000	$251,000
Cost Added during Period	$245,000	$202,400	$447,400
Total cost to be accounted for	$420,000	$278,400	$698,400
Equivalent units of production	3500	3100
Cost per Equivalent unit	$120.00	$89.81

Solution C:

Four Season Company Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	1000	600
Cost per equivalent unit	$120.00	$89.81
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$120,000	$53,884	$173,884
Units completed and transferred	2500	2500
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$300,000	$224,516	$524,516