ro-day-o inc. manufactures belt buckles in a single -step production process. Th

Question

ro-day-o inc. manufactures belt buckles in a single -step production process. The following information is available for june 2010:
whole units cost of material cost of labor
beginning work in process 200,000 1,200,000 1,728,000
units started during period 1,000,000 7,800,000 9,612,000
units in ending inventory 300,000

beginning inventory units were 100 percent complete as to material and 80% complete as to labor. The ending inventory units were 100% complete as to material and 50% complete as to labor. overhead is applied to production at the rate of 60% of direct labor cost.
a. prepare a schedule to compute equivalent units of production by cost component assuming the weighted average method.
b. determine the unit production costs for material and conversion.
c. calculate the costs assigned to completed units and ending inventory for august 2010.

Explanation / Answer

a. prepare a schedule to compute equivalent units of production by cost component assuming the weighted average method.
                                                               
                            Qty. Schedule         
Begining WIP              200,000           
Units started          1,000,000           
Total units into
Production             1,200,000
Less : Ending WIP     300,000  
Transferred to FG      900,000
                              ==========
                                                         Equivalent Units
                                                %      Materials   %        Labor
Units Transferred to FG            100    900,000    100 900,000
Ending WIP                              100     300,000      50    150,000     
Total Equivalent Units                 1,200,000         1,050,000                     
                                                     ==========        ==========
b. determine the unit production costs for material and conversion.
                             Total Cost            DM              DL
Beg. WIP             $2,928,000        1,200,000    $1,728,000
Process Cost      $17,412,000        7,800,000 $9,612,000
Total Cost       $20,340,000       9,000,000 $11,340,000
Equivalent Units                           1,200,000      1,050,000
Cost per equivalent unit                 $7.50           $10.80
__________________________________________________________

c. calculate the costs assigned to completed units and ending inventory for august 2010.
                             Materials        Labor            Total
Completed units
900,000 x $7.50   $6,750,000   
900,000 x $10.80                       $9,720,000    16,470,000  
Ending WIP
300,000 x $7.50    $2,250,000
150,000 x $10.80                       $1,620,000       3,870,000
                           ____________________________________
Total                    $900,000 $11,340,000     20,340,000
                          =====================================

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