The inventory at June 1 and costs charged to Work in Process—Department 60 durin

Question

The inventory at June 1 and costs charged to Work in Process—Department 60 during June are as follows:

During June, 32,000 units were placed into production and 31,200 units were completed, including those in inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40% completed. Inventories are costed by the average cost method and all materials are added at the beginning of the process.

Determine the following:

Round cost per unit answers to two decimal places, if necessary. Round equivalent units and total cost to the nearest whole number.

a. Equivalent units of production for conversion cost

b. Conversion cost per equivalent unit and material cost per equivalent unit.

c. Total and unit cost of finished goods completed in the current period

d. Total cost of work in process inventory at June 30
$

3,800 units, 80% completed ($25,000 materials, $35,400 conversion) $60,400 Direct materials, 32,000 units 368,000 Direct labor 244,000 Factory overhead 188,000 Total cost to be accounted for $860,400

Explanation / Answer

ANS;

a) Equivalent units of production for conversion cost

Answer: 32,830

Solution: [Step 1] 27,400 units started & completed during period (31,200 total units completed in period - 3,800 units inventory in process, beginning of period) + 1,520 equivalent units for conversion inventory in process, beginning of period (3,800 total whole units x 40% conversion completed in period) = 28,920 units transferred out (completed)

[Step 2] 28, 920 units + 3,910 equivalent units for conversion inventory in process, end of period (4,600 total whole units x 85% conversion completed in period) = 32,830 total equivalent units for conversion to be assigned costs

b) Conversion cost per equivalent unit

  Answer: $13.4633

Solution: [Step 1] Formula to use --> Conversion Cost per Equivalent Unit = Total Conversion Costs for the Period / Total Equivalent Units of Conversion Costs

Conversion costs = Direct Labor + Factory Overhead = $274,000 + $168,000 = $442,000

[Step 2] $442,000 / 32,830 units = $13.4633

c) Total and unit cost of finished goods started in prior period and completed in the current period

  Answer: Total cost - $80,864

Unit cost - $21.2800

Solution: [Step 1] Total cost = $60,400 + (1,520 x $13.4633) = $80,864

[Step 2] Unit cost = $80,864 / 3,800 units = $21.28

d) Total and unit cost of finished goods started and completed in the current period

  Answer: Total cost - $692,557

Unit cost - $25.2758

Solution: [Step 1] (27,400 x $13.4633) + (27,400 x $11.8125) = $692,557

[Step 2] $692,557 / 27,400 = $25.2758

e) Total cost of work in process inventory at June 30

  Answer: $106,980

Solution: [Step 1] (4,600 x $11.8125) = $54,338 (need to round up to nearest dollar before adding values)

[Step 2] (3,910 x $13.4633) = $52,642 (need to round up to nearest dollar before adding values)

[Step 3] $54,338 + $52,642 = $106,980 (if you don't round up values in first 2 steps prior to adding, you will be 1 dollar short from correct answer)

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