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Assignment 3 Answers

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Jake Shin
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17 views

Assignment 3 Answers

Uploaded by

Jake Shin
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem

Beta Company manufactures a single product and uses process costing (FIFO method). The
company's product goes through two processing departments, Etching and Wiring. The following
activity was recorded in the Etching Department during July:

Materials are added at several stages during the etching process. The company uses the FIFO
method.

Required:
1. Compute the equivalent units of production.
2. Compute the costs per equivalent unit for July.
3. Determine the cost of ending work in process inventory and of the units transferred to the
Wiring Department.
4. Prepare a cost reconciliation between the costs determined in (3) above and the cost of
beginning inventory and costs added during the period.
1. Equivalent Units of Production

Physical Equivalent Units


Flow of Production Units Direct Material Conversion
WIP, opening balance 50,000
WIP started during current period 500,000
Total WIP to be accounted for 550,000

Completed & transferred out (current period) 50,000


From beginning work in process (50000 x 0.4) (50000 x 0.7)
20,000 35,000
Started and completed 440,000 (440000 x 100%) (440000 x 100%)
440,000 440,000
WIP, ending 60,000 (60000 x 0.8) (60000 x 0.4)
48,000 24,000
Totally WIP to be accounted for    
Work done in current period 550,000 508,000 499,000

2. Costs per Equivalent Unit

Total
Production Direct Conversion
  Cost Materials Costs
WIP, opening balance $20,000 $17,000 $3,000
Costs added in current period $806,500 $457,200 $349,300
Total costs to be accounted for $826,500 $474,200 $352,300

Costs added in current period $457,200 $349,300

Equivalent units of work done (current


period) 508,000 499,000
Cost per equivalent unit of work done in
current period $0.90 $0.70
3. Cost of ending WIP and of the units transferred to the Wiring Department

Total
Production Direct Conversion
  Cost Materials Costs
Equivalent units of production 48,000 units 24,000 units
Cost per equivalent unit $0.90 $0.70
(48000 x $0.9) (24000 x $0.7)
Total cost of ending WIP $60,000 $43,200 $16,800

Completed and transferred out


(490,000 units)

Beginning WIP (50,000 units) $20,000 $17,000 $3,000

(50000x$0.9x0.4) (50000x$0.7x0.7)
Cost added to beginning WIP $42,500 $18,000 $24,500

Total costs in current period $62,500

Started and completed (440,000


(440000 x $0.9) (440000 x $0.7)
units)
$704,000 $396,000 $308,000

Total costs of units completed and


$766,500
transferred

4. Cost Reconciliation Schedule


Total Direct Conversion
Costs Materials Costs
Costs to be accounted for:
Cost of beginning work in process inventory $20,000 $17,000 $3,000
Costs added in current period $806,500 $457,200 $349,300
Total costs to be accounted for $826,500 $474,200 $352,300
Cost of ending WIP 60,000
Total costs of units completed and
transferred $766,500
Total costs to account for $826,500

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