Oshkosh Company makes wooden toys in its Forming Dept and it uses the W eighted-
ID: 2426138 • Letter: O
Question
Oshkosh Company makes wooden toys in its Forming Dept and it uses the Weighted-Average Method of process costing. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the process. Spoiled units are detected upon inspection at the end of the process and are disposed of at zero net disposal value. Summary data for August 2014 is:
Physical Direct Conversion
Units Materials Costs
Work-in-process, beginning inventory (Aug 1) 2,000 $17,700 $10,900
Degree of completion of beginning Work-in-process 100% 50%
Started during August 10,000
Good units completed and transferred out during August 9,000
Work-in-process, ending inventory (Aug 31) 1,800
Degree of completion of ending Work-in-process 100% 75%
Total costs added during August $81,300 $93,000
Normal spoilage as a percentage of good units 10%
Degree of completion of normal spoilage 100% 100%
Degree of completion of abnormal spoilage 100% 100%
1.For each cost category, calculate equivalent units. Show physical units in the first column of your schedule.
2. Summarize total costs to account for, calculate cost per equivalent unit for each cost category, and assign total costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending Work-in-process.
Explanation / Answer
Solution :
Reconcilation of the number of physical units worked on during the period.
As at Begining
2,000
Units started in current period
10,000
Units to be accounted for
12,000
Transferred out
9,000
Normal Spoilage (9000*10%)
900
Abnormal (12000 - 9000-900-1800)
300
As at end
1,800
Units accounted for
12,000
1.calculation of equivalent units.
Direct Materials
Conversion Costs
Transferred out (A)
9,000
9,000
normal spoilage (B)
900
900
abnormal spoilage (C)
300
300
Units as at end (D)
1,800
1,800
Percentage of completion (E)
100%
75%
Equivalent units as at end (F=D×E)
1,800
1,350
Total equivalent units (A+B+C+F)
12,000
11,550
2.calculatation of cost per equivalent unit.
Total
Direct Materials
Conversion Costs
As at begining
17700
10900
28600
Added during the period
81300
93000
174300
Costs to be accounted for
99000
103900
202900
Total equivalent units
12,000
11,550
Cost per equivalent unit
8.25000
8.99567
17.24567
total cost of units transferred out
160,385
(9300*17.24567)
cost of the abnormal units
15,521
(900*17.24567)
cost of the ending inventory
26,994
(1800 * 8.25) + (1350 * 8.99567)
Reconcilation of the number of physical units worked on during the period.
As at Begining
2,000
Units started in current period
10,000
Units to be accounted for
12,000
Transferred out
9,000
Normal Spoilage (9000*10%)
900
Abnormal (12000 - 9000-900-1800)
300
As at end
1,800
Units accounted for
12,000
1.calculation of equivalent units.
Direct Materials
Conversion Costs
Transferred out (A)
9,000
9,000
normal spoilage (B)
900
900
abnormal spoilage (C)
300
300
Units as at end (D)
1,800
1,800
Percentage of completion (E)
100%
75%
Equivalent units as at end (F=D×E)
1,800
1,350
Total equivalent units (A+B+C+F)
12,000
11,550
2.calculatation of cost per equivalent unit.
Total
Direct Materials
Conversion Costs
As at begining
17700
10900
28600
Added during the period
81300
93000
174300
Costs to be accounted for
99000
103900
202900
Total equivalent units
12,000
11,550
Cost per equivalent unit
8.25000
8.99567
17.24567
total cost of units transferred out
160,385
(9300*17.24567)
cost of the abnormal units
15,521
(900*17.24567)
cost of the ending inventory
26,994
(1800 * 8.25) + (1350 * 8.99567)
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