During July, the following costs were incurred: Materials (30,000 units) $24,900

Question

During July, the following costs were incurred:
Materials (30,000 units) $24,900
Labour and overheads $20,075
At the beginning of July, there were 15,000 units of work in progress valued as follows:
Materials (100% complete) $9,000
Labour and overheads (40% complete) $1,250
At the end of July, there were 5,000 units of work-in-progress. They were 100% complete for materials
and 50% complete for labour and overheads.
Using both FIFO approach and Weighted Average approach:
(a) calculate how many units were completed during July
(b) calculate the cost per unit
(c) value the finished items and the closing work-in-progress
(d) prepare a Process Account. (Note: assume no losses)

Explanation / Answer

Solution - FIFO Approach:

a.

b.

c.

Value of finished items = $49,700

Value of closing WIP = $5,525

d.

Solution - Weighted Average Approach:

a.

b.

c.

Value of finished items = $50,204

Value of closing WIP = $5,021

d.

Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 15000 Units started this period 30000 Total unit to be accounted for 45000 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 60% 15000 0 9000 Started and completed currently 25000 25000 25000 Units in ending WIP
Material - 100%
Conversion - 50% 5000 5000 2500 Total units accounted for 45000 30000 36500

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