Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

The following information concerns production in the Forging Department for Sept

ID: 2416918 • Letter: T

Question

The following information concerns production in the Forging Department for September. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $63,900 of direct materials. Based on the above data, determine each of the following amounts. If required, round your interim calculations to two decimal places. Round final answers (a-c) to the nearest dollar. Cost of beginning work in process inventory completed in September. $ Cost of units transferred to the next department during September. Cost of ending work in process inventory on September 30. $ 2,160 Costs per equivalent unit of direct materials and conversion included in the September 1 beginning work in process. If required, round your answers to two decimal places. Direct materials cost per equivalent unit $ Conversion cost per equivalent unit $ The September increase or decrease in costs per equivalent unit for direct materials and conversion from the previous month. If required, round your answers to two decimal places. Change in direct materials cost per equivalent unit $ Change in conversion cost per equivalent unit $

Explanation / Answer

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, Sept 1 (70% completed)

4,500

0

1,350

Started and completed in September*

37400

37,400

37,400

Transferred to finished goods in September

41,900

37,400

38,750

Inventory in process, September 30 (60% completed)

3,600

3,600

2,160

Total units

45,500

41,000

40,910

*41,000 - 3,600

Costs

Direct Materials

Conversion

Total costs for September in Forging Department

$5,74,000

$98,184

Total equivalent units (from above)

41,000

40,910

Cost per equivalent unit

$14.00

$2.40

a.     $78,386; determined as follows:

        Beginning work in process balance........................................................      $ 71,145

        Conversion costs incurred during September
(1,350 equivalent units × $2.40).............................................................          $3,240

        Cost of beginning work in process completed during September.        $74,385

b.     Cost of beginning work in process..........................................................        $74,385

        Cost of units started and completed during September....................      $613,360*

        Cost of units transferred to finished goods during September.......     $687,745

        *($14 + $2.40) × 37,400 units

c.     $79,380; determined as follows:

        Direct materials ($14 × 3,600 units)...........................................................        $50,400

        Conversion costs ($2.40 × 2,160 equivalent units)..............................          $5,184

        Cost of ending work in process inventory.............................................        $55,584

        Note: The cost of ending work in process is also the ending balance of the Work in Process—Forging Department as of September 30.

d.     Direct materials cost per equivalent unit: $14.20 ($63,900/4,500 units)

        Conversion cost per equivalent unit: $2.30 ($7,245*/3,150 units**)

              *Work in process, September 1...........................................................        $71,145

               Less direct materials cost....................................................................       $63,900

               Conversion cost included in September 1, work in process.....          $7,245

            **Equivalent units in September 1, work in process (4,500 × 70%) = 3,150 units

e.     Direct materials: Decrease of $0.20 ($14 – $14.20)

        Conversion: Increase of $0.10 ($2.40 – $2.30)

Equivalent Units

Whole Units

Direct Materials

Conversion

Inventory in process, Sept 1 (70% completed)

4,500

0

1,350

Started and completed in September*

37400

37,400

37,400

Transferred to finished goods in September

41,900

37,400

38,750

Inventory in process, September 30 (60% completed)

3,600

3,600

2,160

Total units

45,500

41,000

40,910

*41,000 - 3,600