Clopack Company manufactures one product that goes through one processing depart

Question

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method to account for units and costs. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June): Work in Process—Mixing Department June 1 balance 45,000 Completed and transferred to Finished Goods ? Materials 140,400 Direct labor 89,500 Overhead 107,000 June 30 balance ? The June 1 work in process inventory consisted of 6,000 pounds with $24,250 in materials cost and $20,750 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 60% complete with respect to conversion. During June, 38,500 pounds were started into production. The June 30 work in process inventory consisted of 10,000 pounds that were 100% complete with respect to materials and 50% complete with respect to conversion.

Explanation / Answer

Given opening work in process =6000 pounds and introduced into production during the month =38,500 pounds.and closing work in process =10000 pounts.

Therefore completed and transferred to finished goods = Opening workin process+Introduced into production - Closing workin process

=6,000+38,500 -10,000

=34,500 pounds is the completed and transferred to finished goods.

Given conversion cost of opening workin process = $20,750. and % of completion =60%.

Therefore in order to complete 40%, conversion cost that would be incurred = ($20,750/60%)*40%

=$13,833.

Cost of conversion = Direct labour+Overhead cost

=$89,500+$107,000.

=$196,500

This is the cost of conversion for the goods transferred to finished goods i.e., cost of conversion of 34,500 pounds.

Cost of conversion of the freshly introduced material = Total cost of conversion - Cost of conversion of opening work in process

=$196,500 -$13,833

=$182,666.67.

Therefore this is the cost of conversion of 34,500 -6000 =28,500 pounds.

Cost of conversion per pound=182,666.67/28,500

=$6.40935.

But the closing work inprocess =10000 pounds and the conversion cost =50%. Therefore, conversion cost in closing working process =10,000 *$6.40935 *50%

=$32,046.78.

Direct material cost in closing work in process is arrived as follows:

Cost of direct material in the tranferred to finished goods =$140,400. This inclued opening work in procee of 6000 pound worth $24,250, therefore balance is the cost of newly introduced material =$140,400 -$24,250 =$116,150 is the cost of pounds 28,500 pounds (34,500 -6000).

Therefore, cost per pound of material = $116,150/28,500

=4.075438.

Cost of material in closing work in process =10000 pounds *4.075438

=40,754.39.

Therefore, closing work inprocess is 10000 pounds worth $40,754.39 with a conversion cost of $32,046.78 at 50% completion.

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