me Neann Company operates several production processes involving the mixing of n

Question

me Neann Company operates several production processes involving the mixing of nts to produce bulk feed. One such product is mixed in two separate process erations. Materials are introduced at the beginning of the first process and the finish prood d tne first process is transferred to process 2. The conversion coste in the second proces ncurred evenly during the process The following information relates to Process 2 Production Data: Units in process at Oct. 1 150 000 units Direct material 100% Conversion cost 50% Units started in October 600 000 Units Units in process at Oct. 31 . 120 000 Units … Direct materials 100% conversion costs 60% Cost Data: Work in process inventory Oct 1 Material cost $66 000 $62 000 Conversion cost Cost added during the month of October $352 000 Material cost $248 000 Required Prepare a process- costing worksheet (AVCO method) for Process 2, accounting for the quantity of products produced, the equivalent units in production and costs. (25marks)

Explanation / Answer

Units percentage of completion equivalent units

Direct material Conversion cost

Beginning work in process 150000 50%

Units started in 600000

Total units to account for 750000

Units completed and transferred 630000 630000 630000

Ending work in process 120000 60% 1200000 72000

Total units accounted for   750000

Total Equivalent units 750000 702000

Beginning work in process 66000 62000

Add: cost incurred during the month 352000 248000

Total cost to account for $418000 $310000

Equivalent units 750000 702000

Cost per equivalent unit $0.56 $0.44

Cost of units completed and transferred[$352800+$277200] = $630000

Cost of ending work in process[$67200+$31680] = $98000   (rounded off to $98000 from $98880)

Total costs accounted for = $728000

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