Company X makes a product that goes through a single processing department. Dire
ID: 2338556 • Letter: C
Question
Company X makes a product that goes through a single processing department. Direct Materials are added at the start of the process, while Conversion Costs are added evenly during the process. Company X uses the FIFO method of Process Costing.
During last month, Company X had 8,700 units in beginning Work-in-Process Inventory which were 100% complete for materials and 25% complete for conversion. There were 34,500 units started during the period. After finishing the 8,700 units in beginning Work-in-Process Inventory, the company started and completed 23,300 units. (That means the total units transferred to Finished Goods for the period was 8,700 + 23,300 = 32,000 units.) T Company had 11,200 units in ending Work-in-Process Inventory which were 100% complete for materials and 70% complete for conversion.
The beginning Work-in-Process Inventory had a value of $101,093.25 (which was $69,630 of materials and $31,463.25 of conversion). During the month, costs added were $803,610.75 (which was $293,250 of materials and $510,360.75 of conversion).
(a) Calculate the dollar cost of items transferred out of Work-in-Process Inventory and into Finished Goods Inventory for the month using the FIFO method of Process Costing.
(b) Calculate the dollar cost of items in Ending Inventory at the end of the month using the FIFO method of Process Costing.
Now assume all of the above EXCEPT that Company X uses the Weighted Average method of Process Costing.
(c) Calculate the dollar cost of items transferred out of Work-in-Process Inventory and into Finished Goods Inventory for the month using the Weighted Average method of Process Costing.
(d) Calculate the dollar cost of items in Ending Inventory (at the end of the month) using the Weighted Average method of Process Costing.
Explanation / Answer
Answer
EUP - FIFO Method
Units
% Material
EUP Materials
% Conversion
EUP - Conversion
Units of ENDING WIP
11,200
100%
11,200
70%
7,840
Units STARTED & COMPLETED
23,300
100%
23,300
100%
23,300
Units of beginning WIP
8,700
0%
-
75%
6,525
Equivalent Units of Production
34,500
37,665
COST per EUP
Material
Conversion
Cost incurred this period
$ 293,250.00
$ 510,360.75
Total Costs
Costs
$ 293,250.00
Costs
$ 510,360.75
Equivalent units of production
EUP
34,500
EUP
37,665
Cost per EUP
$ 8.50000
$ 13.55000
COST ASSIGNMENT & RECONCILIATION
Cost Transferred out:
EUP
Cost per EUP
Total Cost
Cost of Beginning WIP
$ 101,093.25
Cost to complete beginning WIP-
- Direct Materials
-
$ 8.50
$ -
- Conversion
6,525
$ 13.55
$ 88,413.75
Total cost to complete beginning WIP
$ 189,507.00
Cost of Units started & completed this period:
EUP
Cost per EUP
Total Cost
- Direct Materials
23,300
$ 8.50
$ 198,050.00
- Conversion
23,300
$ 13.55
$ 315,715.00
Total costs started & Completed this period
$ 513,765.00
Total cost of work finished this period
$ 703,272.00 [Answer ‘a’]
Costs of Ending WIP:
EUP
Cost per EUP
Total Cost
- Direct Materials
11,200
$ 8.50
$ 95,200.00
- Conversion
7,840
$ 13.55
$ 106,232.00
Total cost of ending WIP
$ 201,432.00 [Answer ‘b’]
Total costs accounted for
$ 904,704.00
---Answer to Part ‘a’: Cost of Units transferred = $ 703,272
---Answer to Part ‘b’: Cost of ending WIP Inventory = $ 201,432
EUP - Weighted Average Method
Units
% Material
EUP Materials
% Conversion
EUP - Conversion
Units TRANSFERRED
32,000
100%
32,000
100%
32,000
Units of ENDING WIP
11,200
100%
11,200
70%
7,840
Equivalent Units of Production
43,200
39,840
COST per EUP
Material
Conversion
Cost of Beginning WIP
$ 69,630.00
$ 31,463.25
Cost incurred during the period
$ 293,250.00
$ 510,360.75
Total Costs
Costs
$ 362,880.00
Costs
$ 541,824.00
Equivalent units of production
EUP
43,200
EUP
39,840
Cost per EUP
$ 8.40
$ 13.60
TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out
EUP
Cost per EUP
Total Cost
- Direct Materials
32,000
$ 8.40
$ 268,800.00
- Conversion
32,000
$ 13.60
$ 435,200.00
Total Cost transferred Out
$ 704,000.00
Costs of Ending WIP:
EUP
Cost per EUP
Total Cost
- Direct Materials
11,200
$ 8.40
$ 94,080.00
- Conversion
7,840
$ 13.60
$ 106,624.00
Total cost of ending WIP
$ 200,704.00
Total costs accounted for
$ 904,704.00
---Answer to Part ‘a’: Cost of Units transferred = $ 704,000
---Answer to Part ‘b’: Cost of ending WIP Inventory = $ 200,704
EUP - FIFO Method
Units
% Material
EUP Materials
% Conversion
EUP - Conversion
Units of ENDING WIP
11,200
100%
11,200
70%
7,840
Units STARTED & COMPLETED
23,300
100%
23,300
100%
23,300
Units of beginning WIP
8,700
0%
-
75%
6,525
Equivalent Units of Production
34,500
37,665
COST per EUP
Material
Conversion
Cost incurred this period
$ 293,250.00
$ 510,360.75
Total Costs
Costs
$ 293,250.00
Costs
$ 510,360.75
Equivalent units of production
EUP
34,500
EUP
37,665
Cost per EUP
$ 8.50000
$ 13.55000
COST ASSIGNMENT & RECONCILIATION
Cost Transferred out:
EUP
Cost per EUP
Total Cost
Cost of Beginning WIP
$ 101,093.25
Cost to complete beginning WIP-
- Direct Materials
-
$ 8.50
$ -
- Conversion
6,525
$ 13.55
$ 88,413.75
Total cost to complete beginning WIP
$ 189,507.00
Cost of Units started & completed this period:
EUP
Cost per EUP
Total Cost
- Direct Materials
23,300
$ 8.50
$ 198,050.00
- Conversion
23,300
$ 13.55
$ 315,715.00
Total costs started & Completed this period
$ 513,765.00
Total cost of work finished this period
$ 703,272.00 [Answer ‘a’]
Costs of Ending WIP:
EUP
Cost per EUP
Total Cost
- Direct Materials
11,200
$ 8.50
$ 95,200.00
- Conversion
7,840
$ 13.55
$ 106,232.00
Total cost of ending WIP
$ 201,432.00 [Answer ‘b’]
Total costs accounted for
$ 904,704.00
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