The following information concerns production in the Forging Department for Nove
ID: 2555350 • Letter: T
Question
The following information concerns production in the Forging Department for November. All direct materials are placed into the process at the beginning of production, and conversion costs are incurred evenly throughout the process. The beginning inventory consists of $76,760 of direct materials. ACCOUNT Work in Process-Forging Department ACCOUNT NO. Balance Date Item Debit Credit Debit Credit Nov. 1 Bal, 7,600 units, 40% completed 30 Direct materials, 69,000 units 30 Direct labor 30 Factory overhead 30 Goods finished, 2 units 30 Bal., 6,100 units, 80% completed 87,704 770,804 883,224 155,2381,038,462 683,100 112,420Explanation / Answer
Solution a, b & c:
Refer to Production cost report:
a. Cost of beginning WIP completed in november = $16,872
b. Cost of units transferred to next department in november = $960,016
c. Cost of ending WIP inventory on november 30 = $78,446
Solution d:
Direct material cost per equivalent unit in opening WIP = $76,760 / 7600 = $10.10 per unit
Conversion cost per equivalent unit in opening WIP = $10,944 / (7600*40%) = $3.60 per unit
Solution e:
Change in direct material cost per equivalent unit = $9.90 - $10.10 = $0.20 decrease
Change in conversion cost per equivalent unit = $3.70 - $3.60 = $0.10 increase.
Forging Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 7600 Units started this period 69000 Total unit to be accounted for 76600 Units Accounted for: Units completed and transferred out From beginning inventoryMaterial - 0%
Conversion - 60% 7600 0 4560 Started and completed currently 62900 62900 62900 Units in ending WIP
Material - 100%
Conversion - 80% 6100 6100 4880 Total units accounted for 76600 69000 72340
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