Direct materials are added at the start of the process. Conversion costs are add

Question

Direct materials are added at the start of the process. Conversion costs are added evenly during the process. We use the weighted average-method of process costing. The following information for March 2013 is available.

Work in process, Mar. 1:                                   10,000 units (70% converted)

Started during March:                                       40,000 units

Completed and transferred during March:           34,000 units

**Ending working in process is 50% converted as direct labor and overhead**

Total costs for March:

Working in process beginning:

   Direct Materials $60,000

   Direct Labor:      $50,000

   Overhead Applied: $20,000

direct materials added during March:   $280,000

Direct labor added during March:         $265,000

Overhead applied during March:           $106,000

***Questions***

1. Calculate cost per unit for materials, labor and overhead.

2. Prepare the journal entries for the costs used in work in process plus the cost transferred from work-in-process to finished goods.

3. If the actual manufacturing overhead was $100,000 during March what is the balance in manufacturing overhead at March 31, 2013.

4. What is the journal entry to account for the over or under-applied overhead?

5. What is the March 31, 2013 balance in work in process?

Explanation / Answer

Cost of Prduction report Equivalent Units Flow Of Units Physical Units Direct Material Direct Labour Overhead Units to be accounted for Beginning work in process inventory 10000 Units started this period 40000 Total u nits to be accounted for   Ans A 50000 Units accounnted for: Completed and transferred out (b) 34000 34000 34000 34000 Ending work in progress inventory© 16000 16000 8000 8000 Total units to be accounted for (f)      50000 50000 42000 42000 Flow of Cost Cost in the begnning work in progress inventory 130000 60000 50000 20000 Cost added in current period 651000 280000 265000 106000 Total Cost to be accounted for (e)     781000 340000 315000 126000 Cost per equivalent unit (a)    (e/f) Ans 1 14.30 6.80 7.50 3.00 Cost accounted for Cost assigned to units transferred out (a*b) 588200 231200.00 255000.00 102000.00 Cost in ending work in progress inventory (a*c)    Ans 5 192800 108800.00 60000.00 24000.00 Total Cost accounted for    781000.00 340000.00 315000.00 126000.00 Dr Cr             $ Ans 2 Work in process 651000 Direct material 280000 Wages Payable 265000 Manufacturing Overhead 106000 Finisheg Goods 588200 Work in process 588200 Ans 3 Manufacturing Overhead 100000 Cash 100000 Balance 106000+20000-100000 $26,000 Ans 4e Overapplied Manufacturing Overhead 26000 Cost of good sold 26000 Ans 5 Balance of work in process $192,800

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