The inventory at May 1 and the costs charged to Work in Process -- Department B

Question

The inventory at May 1 and the costs charged to Work in Process -- Department B during May for Star Company are as follows:

8,000 Units, 75% Completed ---- $65,600

From Department A, 43,500 Units ---- $78,300

Direct Labor ---- $292,400

Factory Overhead ---- $107,100

During May, all direct materials are transferred from Department A, the units process at May 1 were completed, and of the 43,500 units entering the department, all were completed except 9,000 units which were 2/3 the department. Inventories are costed by the first in, first out method.

Prepare a cost of production report for May!

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 8,000 Add: Units Started in Process 43,500 Total Units to account for: 51,500 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 8000 Units started and completed 34,500 Ending Work in Process 9,000 Total Units to be accounted for: 51,500 Equivalent Units: Transferred In cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 25% 2,000 Units started and completed 100% 34,500 100% 34,500 Ending Work in Process 100% 9,000 67% 6,000 Total Equivalent units 43,500 42,500 COST PER EQUIVALENT UNIT: Transferred In Conversion Total cost added during the year 78,300 399,500 Equivalent Units 43,500 42,500 Cost per Equivalent unit 1.8 9.4 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (8000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 65600 Transferred In cost 0 1.8 0 Conversion Cost 2,000 9.4 18800 Cost of units completed from Beg WIP 84400 Units started and Transferred out (34500 units) Equivalent unit Cost per EU Total Cost Transferred in cost 34,500 1.8 62100 Conversion Cost 34,500 9.4 324300 Total Cost of Units completed and transferred out: 386400 Ending Work in process (9,000 units) Equivalent unit Cost per EU Total Cost Transferred in Cost 9,000 1.8 16200 Conversison Cost 6,000 9.4 56400 Total cost of Ending Work in process: 72,600

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