The followinginformation concerns production in the Forging Department for Co No

ID: 2409626 • Letter: T

Question

The followinginformation concerns production in the Forging Department for Co November. All direct materials are placed into the process at the beginning of Mow production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $9,000 of direct materials. How ACCOUNT Work in Process-Forging Department ACCOUNT NO.+ Balance Date Item Debit Credit Debit Credit 1 0 Direct materials, 12,900 units 30 Direct labor 30 Factory overhead 0 Goods transferred, 2 units 30 Bal., 1,400 units, 70% completed 10,566 134,406 156,056 172,926 Nov. Bal., 900 units, 60% completed 123,840 21,650 16,870 a. Determine the number of units transferred to the next department. Answer b. Determine the costs per equivalent unit of direct materials and conversion. c. Determine the cost of units started and completed in November.

Explanation / Answer

(a) No of units transferred to next Dept :-

Beginning + New Introduced – Closing

900 units + 12900 units – 1400 units = 12400 units

(b) Cost per equivalent unit of Direct Material & Conversion :-

Direct Material

Conversion

Beginning 900 units, 60% complete

----

(900 * 40%)

=360

(+) Introduced & complete (12900 – 1400)

11500

(-) Closing WIP 1400 units, 70% complete

1400

(1400 * 70%)

=980

Equivalent units (A)

12900

12840

Cost (B)

123840

(21650 + 16870)

=38520

Cost per equivalent unit (B/A)

9.60

3.00

(c) Cost of units started & completed :-

Introduced – Closing WIP

12900 – 1400 = 11500 units