Question

Perez Plastic Products Company makes a plastic toy using two departments: parts and assembly. The following data pertain to the parts department's transactions in 2018: 1. The beginning balance in the Work in Process Inventory account was $12,200. This inventory consisted of parts for 1,000 toys. The beginning balances in the Raw Materials inventory Production Supplies, and Cash accounts were $178,400, $2.000 and $400,000, respectively 2. Direct materials costing $156,200 were issued to the parts department. The materials were sufficient to make 5,000 additional toys. 3. Direct labor cost was $91,000, and indirect labor costs were $9,600. All labor costs were paid in cash. 4. The predetermined overhead rate was $0.25 per direct labor dollar 5. Actual overhead costs other than production supplies and indirect labor for the year were $13,550, which was paid in cash 6. The parts department completed work for 5,500 toys. The remaining toy parts were 40 percent complete. The completed parts were transferred to the assembly department 7. All of the production supplies had been used by the end of 2018 8. Over- or underapplied overhead was closed to the Cost of Goods Sold account. Required a. Determine the number of equivalent units of production b. Determine the product cost per equivalent unit. c. Calculate the total cost allocated between the ending work in process inventory and parts transferred to the assembly department d. Record the transactions in a partial set of T-accounts.

Answer 1

a)Schedule of Equivalent Units
	Actual	Equivalent units
Beginning inventory	1000
Units added to production	5000
Total to be accounted for	6000
Transferred to the assembly department	5500	x 100%	5500
Ending inventory	500	x 40%	200
Total accounted for	6000		5700
b) Cost per equivalent Unit
Beginning inventory	12200
Cost added to production $156200 (DM) + $91,000 (DL)  + (91000 x .25) (Applied MOH)	269950
Total to be accounted for	282150
Cost per unit = $282,150 / 5700	$         49.50
c) cost allocation
To the assembly department (5500 units x $49.50)	$272,250.00
To ending inventory (200equivalent units x $49.50)	$    9,900.00
Total allocated cost	$282,150.00
d)
Record the transactions in a partial set of T-accounts.
Cash
Begin Bal	400000	3)	100600
		5)	13550
End Bal	285850
Raw Mat
Begin Bal	178400	2)	156200
End Bal	22200
Work in Process Parts
Begining Bal	12200	6)	$272,250.00
2)	156200
3)	91000
4) (91000 x $.25)	22750
End Bal	$    9,900.00
Work in Process Assembly
Begining Bal	0
6)	$272,250.00
End Bal	$272,250.00
Production Supplies
Begining Bal	2000	7)	2000
End Bal	0
Cost of Goods Sold
8)	2400
End Bal	2400
Manufacturing Overhead
3)	9600	4)	22750
5)	13550	8)	2400
7)	2000
End Bal	0

1a Schedule of Equivalent Units Equivalent units 5 6 Beginning inventory Units added to production Total to be accounted for Transferred to the assembly department Ending inventory Total accounted for Actual 1000 5000 =B3+B4 5500 =B5-B6 =B6+B7 x 100% x 40% =5500*100% =500*40% =D6+D7 8 10 b) Cost per equivalent Unit 11 Beginning inventory 12 Cost added to production $156200 (DM) + $91,000 (DL) + (91000 x 25) (Applied MOH) 13 Total to be accounted for 14 Cost per unit = $282,150 / 5700 15 16 c) cost allocation 17 To the assembly department (5500 units x $49.50) 18 To ending inventory (200equivalent units x $49.50) 19 Total allocated cost 12200 = 156200+91000+(91000*0.25 =B11+B12 =B13/DB =D6B14 =D7B14 =B 17+B 18 21 d) 22 Record the transactions in a partial set of T-accounts. 23 Cash 24 Begin Bal 400000 =91000+9600 13550 5) 26 End Bal =B24-D24-D25 2) 156200 178400 =B29-D29 28 Raw Mat 29 Begin Bal 30 End Bal 31 32 Work in Process Parts 33 Begining Bal 34 2) 35 3) 36 4) (91000 x $.25) 37 End Bal =B17 12200 =D29 91000 =B35'0.25 =SUM(B33:B36)-D33 38 =D33 =B40+B41 39 Work in Process Assembly 40 Begining Bal 41 6) 42 End Bal 43 44 Production Supplies 45 Begining Bal 46 End Bal 2000 =B45 48 Cost of Goods Sold 49 8) 50 End Bal =D54 =B49 52 Manufacturing Overhead 53 3) 54 5) 55 7) 56 End Bal =9600 =D25 =B45 8) =B36 =B53-B54+B55-D53