The inventory at June 1 and costs charged to Work in Process - Department 60 dur
ID: 2387957 • Letter: T
Question
The inventory at June 1 and costs charged to Work in Process - Department 60 during June are as follows:3,800 units, 60% completed $ 60,400
Direct materials, 32,000 units 378,000
Direct labor 274,000
Factory overhead 168,000
Total cost to be accounted for $880,400
During June, 32,000 units were placed into production and 31,200 units were completed, including those in inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 85% completed. Inventories are costed by the first-in, first-out method and all materials are added at the beginning of the process.
Determine the following, presenting your computations (Prepare your computations using unit cost data to four decimal places, i.e. $4.4444, to minimize rounding differences): (10 points)
(a) equivalent units of production for conversion cost
(b) conversion cost per equivalent unit
(c) total and unit cost of finished goods started in prior period and completed in the current period
(d) total and unit cost of finished goods started and completed in the current period
(e) total cost of work in process inventory at June 30
Explanation / Answer
a) Equivalent units of production for conversion cost
Answer: 32,830
Solution: [Step 1] 27,400 units started & completed during period (31,200 total units completed in period - 3,800 units inventory in process, beginning of period) + 1,520 equivalent units for conversion inventory in process, beginning of period (3,800 total whole units x 40% conversion completed in period) = 28,920 units transferred out (completed)
[Step 2] 28, 920 units + 3,910 equivalent units for conversion inventory in process, end of period (4,600 total whole units x 85% conversion completed in period) = 32,830 total equivalent units for conversion to be assigned costs
b) Conversion cost per equivalent unit
Answer: $13.4633
Solution: [Step 1] Formula to use --> Conversion Cost per Equivalent Unit = Total Conversion Costs for the Period / Total Equivalent Units of Conversion Costs
Conversion costs = Direct Labor + Factory Overhead = $274,000 + $168,000 = $442,000
[Step 2] $442,000 / 32,830 units = $13.4633
c) Total and unit cost of finished goods started in prior period and completed in the current period
Answer: Total cost - $80,864
Unit cost - $21.2800
Solution: [Step 1] Total cost = $60,400 + (1,520 x $13.4633) = $80,864
[Step 2] Unit cost = $80,864 / 3,800 units = $21.28
d) Total and unit cost of finished goods started and completed in the current period
Answer: Total cost - $692,557
Unit cost - $25.2758
Solution: [Step 1] (27,400 x $13.4633) + (27,400 x $11.8125) = $692,557
[Step 2] $692,557 / 27,400 = $25.2758
e) Total cost of work in process inventory at June 30
Answer: $106,980
Solution: [Step 1] (4,600 x $11.8125) = $54,338 (need to round up to nearest dollar before adding values)
[Step 2] (3,910 x $13.4633) = $52,642 (need to round up to nearest dollar before adding values)
[Step 3] $54,338 + $52,642 = $106,980 (if you don't round up values in first 2 steps prior to adding, you will be 1 dollar short from correct answer)
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