Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes th
ID: 2445770 • Letter: S
Question
Swasey Fabrication, Inc., manufactures frames for bicycles. Each frame passes through three
processes: Cutting, Welding, and Painting. In September, the Cutting Department of the Tulsa,
Oklahoma, plant reported the following data:
a. In Cutting, all direct materials are added at the beginning of the process.
b. Beginning work in process consisted of 40,500 units, 100 percent complete for DM and 20
percent complete with respect to direct labor and overhead. Costs in beginning inventory
included direct materials, $1,215,000; direct labor, $222,600; and applied overhead,
$150,000.
c. Costs added to production during the month were direct materials, $2,565,000; direct labor,
$3,471,150. Overhead was assigned using the following information:
Overhead was assigned using the following information:
Inspection: $150 per inspection hour @ 4,000 inspection hours
Maintenance $750 per maintenance hour @ 1,600 maintenance hours
Receiving $300 per receiving order @ 2,000 receiving orders
d. At the end of the month, 121,500 units were transferred out to Welding, leaving 13,500 units
in ending work in process, 100 percent complete for DM and 25 percent complete for
conversion.
Assume that the FIFO method is used
1) Prepare a physical flow schedule.
2) Calculate equivalent units of production for direct materials and conversion costs.
3) Compute the unit cost. Round to three decimal places
4) Calculate the cost of goods transferred to Painting at the end of the month. Calculate the
cost of ending inventory.
Explanation / Answer
Physical flow of units Physical units % of completion w.r.t.Conversion Equivalent units DM Conversion Beginning WIP 40500 20% Units started 94500 Units to account for 135000 Units transferredout 121500 100% 121500 121500 Ending WIP 13500 25% 13500 3375 Units accounted for 135000 Total Equivalent units 135000 124875 Less: Eq. units in Beg. WIP 40500 8100 Equivalent units of September 94500 116775 Computation of unit cost DM Conversion Total Beginning WIP As these costs were incurred in 1587600 the previous month -not included for unit cost calculation Costs incurred in Sep. 2565000 5871150 8436150 Total cost to account for 10023750 Equivalent units in Sep. 94500 116775 Cost per equivalent unit 2565000/94500 5871150/116775 ie. 27.143 50.277 77.420 Assignment of OH Inspection 600000 Maintenance 1200000 Receiving 600000 Total OH 2400000 D/L 3471150 Total Conversion 5871150 Cost of goods transferred out of the Cutting Dept. in September Cost of beginning WIP transferred out 1587600 Cost incurred to finish beg. WIP 1628974.8 40500*80%*50.277 Cost incurred on units started & completed (121500-40500)*77.42 6271020 Total cost of goods completed & transferred out 9487594.8 Cost of ending inventory Eq. units Unit cost Direct Materials 13500 27.143 366430.5 Conversion 3375 50.277 169684.875 Total value 536115.375 Verification Total cost of goods completed & transferred out 9487594.8 Cost of ending inventory 536115.375 Total cost accounted for 10023710.18 Diff. due to Rounding off error
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