Alvis Construction Supply Company has a department that manufactures wood trusse
ID: 2341412 • Letter: A
Question
Alvis Construction Supply Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February:
Required
Using the weighted-average method, calculate the following:
1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.)
1-b. Cost of goods completed and transferred out. (Round intermediate values to 4 decimal places.)
1-c. Costs remaining in the Work-in-Process Inventory account.
2. Assume that you are the company’s controller. The production department’s February equivalent unit cost is higher than expected. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 40 to 60% to lower the unit costs, how much would unit cost be affected by this request? (Round your answer to 4 decimal places.)
Alvis Construction Supply Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February: Work-in-process inventory, February 1 4,000 trusses Direct materials: 100% complete $ 10,480 Conversion: 20% complete $ 15,258 Units started during February 18,000 trusses Units completed during February and transferred out 17,000 trusses Work-in-process inventory, February 29 Direct materials: 100% complete Conversion: 40% complete Costs incurred during February Direct materials $ 59,040 Conversion $ 92,092 Required Using the weighted-average method, calculate the following: 1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.) 1-b. Cost of goods completed and transferred out. (Round intermediate values to 4 decimal places.) 1-c. Costs remaining in the Work-in-Process Inventory account. 2. Assume that you are the company’s controller. The production department’s February equivalent unit cost is higher than expected. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 40 to 60% to lower the unit costs, how much would unit cost be affected by this request? (Round your answer to 4 decimal places.)
Work-in-process inventory, February 1 4,000 trusses Direct materials: 100% complete $ 10,480 Conversion: 20% complete $ 15,258 Units started during February 18,000 trusses Units completed during February and transferred out 17,000 trusses Work-in-process inventory, February 29 Direct materials: 100% complete Conversion: 40% complete Costs incurred during February Direct materials $ 59,040 Conversion $ 92,092Explanation / Answer
Requirement 1a
Units
Reconciliation of Units
A
Opening WIP
4000
B
Introduced
18,000
C=A+B
TOTAL
22,000
D
Transferred
17,000
E=C-D
Closing WIP
5,000
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
5,000
100%
5,000
40%
2,000
Total
22,000
Total
22,000
Total
19,000
Cost per Equivalent Units
COST
Material
Conversion Cost
TOTAL
Beginning WIP Inventory Cost
$ 10,480.00
$ 15,258.00
$ 25,738.00
Cost incurred during period
$ 59,040.00
$ 92,092.00
$ 151,132.00
Total Cost to be accounted for
$ 69,520.00
$ 107,350.00
$ 176,870.00
Total Equivalent Units
22,000
19,000
Cost per Equivalent Units
$ 3.1600
$ 5.6500
Requirement 1b and 1c
Statement of cost
Cost
Equivalent Cost/unit
Ending WIP
Transferred
Units
Cost Allocated
Units
Cost Allocated
Material
$ 3.16000
5,000
$ 15,800.00
17,000
$ 53,720.00
Conversion Cost
$ 5.65000
2,000
$ 11,300.00
17,000
$ 96,050.00
TOTAL
$ 27,100.00
TOTAL
$ 149,770.00
Cost of goods completed and transferred= $149,770.00
Cost remaining in WIP account= $27,100.00
Requirement 2
Unit cost for material will remain the same
Unit cost for Conversion cost will reduce by $0.2825 per unit .
Working for part 2
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
5,000
100%
5,000
60%
3,000
Total
22,000
Total
22,000
Total
20,000
Cost per Equivalent Units
COST
Material
Conversion Cost
TOTAL
Beginning WIP Inventory Cost
$ 10,480.00
$ 15,258.00
$ 25,738.00
Cost incurred during period
$ 59,040.00
$ 92,092.00
$ 151,132.00
Total Cost to be accounted for
$ 69,520.00
$ 107,350.00
$ 176,870.00
Total Equivalent Units
22,000
20,000
Cost per Equivalent Units
$ 3.1600
$ 5.3675
Statement of cost
Cost
Equivalent Cost/unit
Ending WIP
Transferred
Units
Cost Allocated
Units
Cost Allocated
Material
$ 3.16000
5,000
$ 15,800.00
17,000
$ 53,720.00
Conversion Cost
$ 5.36750
3,000
$ 16,102.50
17,000
$ 91,247.50
TOTAL
$ 31,902.50
TOTAL
$ 144,967.50
Units
Reconciliation of Units
A
Opening WIP
4000
B
Introduced
18,000
C=A+B
TOTAL
22,000
D
Transferred
17,000
E=C-D
Closing WIP
5,000
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