Purry Pulp makes 100% natural, biodegradable litter that is sold in pet stores a
ID: 2334581 • Letter: P
Question
Purry Pulp makes 100% natural, biodegradable litter that is sold in pet stores across the nation. While still a small company, PP needs to track inventory on a monthly basis for reports sent to current and potential investors. Processing information related to May is included below.
Tons
Percent
Complete
Materials
Percent
Complete
Conversion
Material
Cost
Conversion
Cost
WIP, May 1
5,000
100%
50%
$94,000
$133,000
Started/Incurred
15,000
$230,000
$376,000
WIP, May 31
3,000
100%
40%
Problem: Using process costing techniques, compute the ending work-in-process inventory values and costs for materials transferred into finished goods. Use only the Weighted Average Method of process costing.
Tons
Percent
Complete
Materials
Percent
Complete
Conversion
Material
Cost
Conversion
Cost
WIP, May 1
5,000
100%
50%
$94,000
$133,000
Started/Incurred
15,000
$230,000
$376,000
WIP, May 31
3,000
100%
40%
Explanation / Answer
Units
Reconciliation of Units
A
Opening WIP
5,000
B
Introduced
15,000
C=A+B
TOTAL
20,000
D
Transferred
17,000
E=C-D
Closing WIP
3,000
Statement of Equivalent Units
Material
Conversion Cost
Units
Complete %
Equivalent units
Complete %
Equivalent units
Transferred
17,000
100%
17,000
100%
17,000
Closing WIP
3,000
100%
3,000
40%
1,200
Total
20,000
Total
20,000
Total
18,200
Cost per Equivalent Units
COST
Material
Conversion Cost
TOTAL
Beginning WIP Inventory Cost
$ 94,000.00
$ 133,000.00
$ 227,000.00
Cost incurred during period
$ 230,000.00
$ 376,000.00
$ 606,000.00
Total Cost to be accounted for
$ 324,000.00
$ 509,000.00
$ 833,000.00
Total Equivalent Units
20,000
18,200
Cost per Equivalent Units
$ 16.2000
$ 27.9670
Statement of cost
Cost
Equivalent Cost/unit
Ending WIP
Transferred
Units
Cost Allocated
Units
Cost Allocated
Material
$ 16.20
3,000
$ 48,600.00
17,000
$ 275,400.00
Conversion Cost
$ 27.97
1,200
$ 33,560.44
17,000
$ 475,439.56
TOTAL
$ 833,000.00
TOTAL
$ 82,160.44
TOTAL
$ 750,839.56
Cost to be accounted for
Beginning Work In Progress:
Material
$ 94,000.00
Conversion Cost
$ 133,000.00
$ 227,000.00
Cost incurred during period:
Material
$ 230,000.00
Conversion Cost
$ 376,000.00
$ 606,000.00
Total Cost to be accounted for
$ 833,000.00
Cost accounted for
Cost of Units transferred
Equivalent Units
Cost per Equivalent Units
Cost accounted for
Material
17,000
$ 16.20
$ 275,400.00
Conversion Cost
17,000
$ 27.97
$ 475,439.56
$ 750,839.56
Cost of ending WIP
Equivalent Units
Cost per Equivalent Units
Cost accounted for
Material
3,000
$ 16.20
$ 48,600.00
Conversion Cost
1,200
$ 27.97
$ 33,560.44
$ 82,160.44
Total Cost accounted for
$ 833,000.00
While using weighted average method Percentage of goods completed in beginning inventory is not considered for any calculations
Units
Reconciliation of Units
A
Opening WIP
5,000
B
Introduced
15,000
C=A+B
TOTAL
20,000
D
Transferred
17,000
E=C-D
Closing WIP
3,000
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