Problem #1: Process Costing (12 points) Bazinga Paint Company uses a process cos
ID: 2570380 • Letter: P
Question
Problem #1: Process Costing (12 points) Bazinga Paint Company uses a process cost system to accumulate product costs. The first processing department is the Formulation Department. The following production and cost data pertain to February 2017 Total Costs Direct Conversion Units Materials Costs Costs Beginning Work-in Process 60% complete as to Direct Materials Costs 20% Complete as to Conversion Costs 65,000 $204,750 $107,250 $312,000 Entered into Production 645.000 $3452.250 $5.321150 $8,773400 Input Totals 210000 $3,65.000 $5428400 $9,085400 a Complete the following table by computing the weighted-average equivalent units of production (EUP) output by the Formulation Department of Bazinga Paint Company relative to direct materials and conversion costs for the month of February 2017·(4 points) Direct Materials Conversion Units EUP EUP Completed and Transferred Out 630,000 Ending Work-in Process 75% Complete as to Direct Materials Costs 40% complete as to Conversion Costs 80,000 Output TotalsExplanation / Answer
Solution:
Weighted Average (Average Cost) Method
Physical Units Count
Under this method the percentage completion done in the Beginning Inventory is ignored while calculating the equivalent completed units during the current period. Beginning Inventory Units are treated as fresh units introduced for production.
Cost Accounted for:
- The cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed equivalent units.
- The units of Beginning Inventory of WIP and their cost are taken in full under this method
Ending Inventory
The Ending Inventory of WIP is valued at total cost i.e. Cost added during the month/period and Cost of Beginning WIP.
Part a --- Calculation of EUP
Units
Direct Materials
Conversion
EUP
EUP
Completed and Transferred Out
(100% Complete in all respect)
630,000
630,000
630,000
Ending Work In Process
75% complete as to direct materials costs
80,000
60000
(80,000*75%)
40% complete as to conversion costs
32000
(80,000*40%)
Output totals
710,000
690,000
662,000
Part b --- Cost per equivalent unit of production
Direct Materials
Conversion
Cost of Beginning Inventory
$204,750
$107,250
Cost added during the period into production
$3,452,250
$5,321,150
Total Cost
$3,657,000
$5,428,400
Equivalent Units of Production (As per part a)
690,000
662,000
Cost per Equivalent Unit of Production
$5.30
$8.20
Part c --- Allocation of direct materials and conversion costs to output
Units
Direct Materials
Conversion
Total
Completed and Transferred Out
(100% Complete in all respect)
630,000
$3,339,000
(EUP 630,000*$5.30)
$5,166,000
(EUP 630,000*$8.20)
$8,505,000
Ending Work In Process
80,000
$318,000
(EUP 60,000*$5.30)
$262,400
(EUP 32,000*$8.20)
$580,400
75% complete as to direct materials costs
40% complete as to conversion costs
Output totals
710,000
$3,657,000
$5,428,400
$9,085,400
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Units
Direct Materials
Conversion
EUP
EUP
Completed and Transferred Out
(100% Complete in all respect)
630,000
630,000
630,000
Ending Work In Process
75% complete as to direct materials costs
80,000
60000
(80,000*75%)
40% complete as to conversion costs
32000
(80,000*40%)
Output totals
710,000
690,000
662,000
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