Bell Computers, LTD., located in Liverpool, England, assembles a standardized pe
ID: 2433286 • Letter: B
Question
Bell Computers, LTD., located in Liverpool, England, assembles a standardized personal computer from parts it purchases from various suppliers. The production process consists of several steps, starting with assembly of the “mother” circuit board, which contains the central processing unit. This assembly takes place in the CPU Assembly Department. The company recently hired a new accountant who prepared the following partial production report for the department for January using the weighted-average method:
Quantity Schedule:
Units to be accounted for:
Work in process, January 01 10,000
(Materials 90% complete; Conversion 80% complete)
Started into production 58,000
Total units 68,000
Units accounted for as follows:
Completed and transferred out 60,000
Work in Process, January 31 8,000
(Materials 75% complete; Conversion 50% complete)
Total units 68,000
Total Cost:
Cost to be accounted for:
Work in Process, January 01 £ 26,800
Cost added in the department 175,600
Total cost £ 202,400
Cost Reconciliation:
Cost accounted for as follows:
Completed and transferred out £ 186,000
Work in Process, January 31 16,400
Total cost £ 202,400
The company’s management would like some additional information about January’s
operation in the CPU Assembly Department. (The currency in England is the pound,
which is denoted by the symbol “£”.)
Required:
1. How many units were stared and completed during January?
2. What were the equivalent units for January for material and conversion costs?
3. What were the costs per equivalent unit for January? The following additional
data are available concerning the department’s cost:
Particular Total £ Material £ Conversion £
Work in Process, January 01 26,800 18,000 8,800
Cost added during January
Particular Total £ Material £ Conversion £
Work in Process, January 01 26,800 18,000 8,800
Cost added during January
Explanation / Answer
1.) How many units were started and completedduring January?
A.) 50,000. Because the opening work in processwas almost completed when the January started so it is assumed thatthe 60,000 units that are completed and transferred include 10,000units of opening work in process. And as given in question thatthere are 8,000 units in ending work in process. So in January50,000 units are completed that were started in January.
2.) What were the equivalent units for Januaryfor material and conversion costs?
A.) Equivalent Production:
Direct Material: 60000 + (8000 * 75%)= 66000
Conversion Cost: 60000 + (8000 * 50%) =64000.
3.) What were the costs per equivalent unit forJanuary? The following additional data are available concerning thedepartment’s cost:
Particular
Total
£
Material
£
Conversion
£
Work in Process, January 01
26,800
18,000
8,800
Cost added during January
175,600
114,000
61,600
A.) Direct material = £ 132,000 /66,000 units = £ 2
Conversion Cost = £ 70,400 / 64,000 units = £1.1
Total cost per unit = £ 3.1
Particular
Total
£
Material
£
Conversion
£
Work in Process, January 01
26,800
18,000
8,800
Cost added during January
175,600
114,000
61,600
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