Question

Heaton Steel Company is a steel manufacturer. It has three departments. Department A is responsible for melting the scrap metal. Afterwards, the molten metals are transferred to Department B. Department B will then pours the molten metal into ingot casting. Ingot castings are transferred to Department C. Department C sands off any sharp edges and package the castings for shipment to customers. Data for Department A for January are:

Department A: Costs of Beginning Work-in-Process (January 1st)

• Scrap Metal (5,000 tons)                                            $6,000
• Labor work for melting the metal                              $5,000
• Factory Overhead                                                       $500

Department A: Costs Added in January

• Scrap Metal (67,000 tons)                                          $80,000
• Labor                                                                          $130,000
• Factory Overhead                                                       $4,500

Additional information

• 68,000 tons of molten metals transferred to Department B
• January 31st: 50% complete as to conversion costs

Complete the Cost Production Report Below

	ç Inputs ➔			=	ç Outputs ➔
Unit Calculations	Beginnin g WIP Inventory	Add Current Month	Equals Total Production		Completed Transfer Out	Add Ending WIP Inventory	Total Outputs
Direct Materials Whole Units
% Equivalent Completed
Conversion Equivalent Units
	ç Inputs ➔			Cost of Production per Unit	ç Outputs ➔
Cost Calculations	Beginnin g WIP Inventory	Add Current Month	Equals Total Production		Completed Transfer Out	Add Ending WIP Inventory	Total Outputs
Direct Materials Units
Direct Materials Cost
Conversion Units
Direct Labor
Manufacturing Overhead
Total Conversion Cost
Total

Answer 1

Solutions:

Complete the Cost Production Report Below
	ç Inputs ➔			=	ç Outputs ➔
Unit Calculations	Beginnin g WIP Inventory	Add Current Month	Equals Total Production		Completed Transfer Out	Add Ending WIP Inventory	Total Outputs
Direct Materials Whole Units	5000	67000	72000		68000	4000	72000
% Equivalent Completed					100%	50%
Conversion Equivalent Units					68000	2000	70000
	ç Inputs ➔			Cost of Production per Unit	ç Outputs ➔
Cost Calculations	Beginnin g WIP Inventory	Add Current Month	Equals Total Production		Completed Transfer Out	Add Ending WIP Inventory	Total Outputs
Direct Materials Units	5000	67000	72000		68000	4000	72000
Direct Materials Cost	6000	80000	86000	1.2	81222	4778	86000
Conversion Units					68000	2000
Direct Labor	5000	130000	135000	1.93	131143	3857	135000
Manufacturing Overhead	500	4500	5000	0.07	4857	143	5000
Total Conversion Cost	5500	134500	140000	2.00	136000	4000	140000
Total	11500	214500	226000		217222	8778	226000

Notes:

Material cost per unit is calculated as Total Costs / Total units = 86000/72000

Direct Labor and Overhead costs = Total Costs / Equivalent Units = 135000/70000 and 5000/70000

Equivalent Units = 50% complete as to conversion costs = 68000 + 50%*4000 = 70000