Equivalent Units and Related Costs; Cost of Production Report; Entries Wilmingto

Question

Equivalent Units and Related Costs; Cost of Production Report; Entries Wilmington Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals. The balance in the account Work in Process—Filling was as follows on December 1, 2014: Work in Process—Filling Department (2,700 units, 20% completed): Direct materials (2,700 x $16.00) $43,200 Conversion (2,700 x 20% x $10.30) 5,562 $48,762 The following costs were charged to Work in Process—Filling during December: Direct materials transferred from Reaction Department: 34,800 units at $15.60 a unit $542,880 Direct labor 188,700 Factory overhead 181,308 During December, 34,500 units of specialty chemicals were completed. Work in Process—Filling Department on December 31 was 3,000 units, 10% completed.

Explanation / Answer

Note: Since no method is given, Weighted Average is assumed to solve the question.

Equivalent Units:
Material = 34,500 + 3,000 = 37,500 units
Conversion = 34,500 + (3,000 x 10%) = 34,800 units

Cost per equivalent units:
Material = (43,200 + 542,880)/37,500 = $15.63 per unit
Conversion = (5,562 + 188,700 + 181,308)/34,800 = $10.79 per unit

Cost assigned:
Transferred Units = 34,500 x (15.63+10.79) = $911,490
Closing inventory = (3,000 x 15.63) + (3,000 x 10% x 10.79) = $50,160
Total cost assigned = 911,490 + 50,127 = $961,650

Cost to be assigned = 43,200 + 542,880 + 5,562 + 188,700 + 181,308 = $961,650

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