PROCESS COSTING Instructions: Using the following data, complete the requirement

Question

PROCESS COSTING
Instructions: Using the following data, complete the requirements given below.

The Machining Department of Sinclair Corporation reports the following for October 2017:

Production: All materials are added at the beginning of the process. Beginning work in process 20,000 units, 40% complete. Units started into production 200,000 units. Ending work in process 10,000 units, 70% complete.

Manufacturing Costs: Beginning work in process, $45,000, comprised of $17,000 of materials and $28,000 on conversion costs. Materials added $203,000; labor and overhead added $774,900.

Compute equivalent units of production for (1) materials and (2) conversion costs:

Assume you computed the unit cost for the month for (1 ) materials and (2) conversion cost and your answers were $1.00 for materials and $3.50 for conversion costs. Determine the costs to be assigned to the units transferred out.

Once the costs to be assigned to the units transferred out have been determined, then determine the costs assigned to the units in ending work in process.

Explanation / Answer

Using Weighted Average Cost method

Compute equivalent units of production

Unit Completed & transferred = Beginning work in process+ Units started into production - Ending work in process

Unit Completed & transferred = 45000+200000- 10000

Unit Completed & transferred = 235000

Equivalent units of production :

Materials = 220000

Conversion cost = 217000

2)

Costs to be assigned to the units transferred out = (Equivalent cost per unit of Raw material + Equivalent cost per unit of conversion ) * No of Unit transferred

Costs to be assigned to the units transferred out = (1+3.5)*235000

Costs to be assigned to the units transferred out = 1057500

3)

costs assigned to the units in ending work in process = ( Equivaluent unit of material * Material cost per unit) + (Equivaluent unit of conversion cost *conversion cost per unit)

costs assigned to the units in ending work in process = (10000*1 + 7000*3.50)

costs assigned to the units in ending work in process = $ 34500

1 Equivalent Unit Unit Material Conversion Cost % Completed Unit % Completed Unit Unit Completed & transferred 210000 100% 210000 100% 210000 Closing WIP 10000 100% 10000 70% 7000 Total Units 220000 Equivalent Unit 220000 217000

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