Shiffon Electronics manufactures music player. Its costing system uses two cost
ID: 2571455 • Letter: S
Question
Shiffon Electronics manufactures music player. Its costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department, the Programming department, and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Shiffon Electronics uses weighted-average costing.
Work in process, beginning inventory
1.) In proper form prepare the process cost report through cost per equivilant units.
2.) What amount of direct materials costs is assigned to the ending Work-in-Process account for March?
3.) What amount of conversin costs isassigned to the completed and transferred for March?
Work in process, beginning inventory
340 Units Conversion costs (40% Complete) Units started during March 890 Units Work in process, ending inventory: 100 Units Conversion costs (50% complete) The cost details for the month of March are as follows: Work in process, beginning inventory: Direct materials $346,000 Conversion costs $366,000 Direct material costs added during March $703,500 Conversion costs added during March $1,128,500Explanation / Answer
Solution:
1)
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 1 --- Process Cost Report through cost per equivalent units
Physical Units
Equivalent Unit of Production for
Direct Materials
Conversion
Completed and Transferred Out (100% Complete in all respect)
1,130
1,130
1,130
Ending Work In Process (100% complete as to direct materials cost and 50% complete as to conversion costs)
100
100
50
Total
1,230
1,230
1,180
Direct Materials
Conversion
Total
Cost of Beginning Inventory
$346,000
$366,000
$712,000
Cost added during the period into production
$703,500
$1,128,500
$1,832,000
Total Cost
$1,049,500
$1,494,500
$2,544,000
Equivalent Units of Production (As per part a)
1,230
1,180
Cost per Equivalent Unit of Production
$853.25
$1,266.53
Assigning Costs:
Direct materials
Conversion
Total
Completed and transferred Out
$964,172.50
(EUP 1130*853.25)
$1,431,178.90
(EUP 1130*1266.53
$2,395,351.40
Ending work in process
$85,325.00
(EUP 100*853.25)
$63,326.50
(EUP 50*1266.53)
$148,651.50
Total Cost assigned
$1,049,497.50
$1,494,505.40
$2,544,002.90
2) Amount of direct materials costs is assigned to the ending Work-in-Process account for March = $85,325
3) Amount of conversion costs is assigned to the completed and transferred for March = $1,431,178.90
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
Physical Units
Equivalent Unit of Production for
Direct Materials
Conversion
Completed and Transferred Out (100% Complete in all respect)
1,130
1,130
1,130
Ending Work In Process (100% complete as to direct materials cost and 50% complete as to conversion costs)
100
100
50
Total
1,230
1,230
1,180
Direct Materials
Conversion
Total
Cost of Beginning Inventory
$346,000
$366,000
$712,000
Cost added during the period into production
$703,500
$1,128,500
$1,832,000
Total Cost
$1,049,500
$1,494,500
$2,544,000
Equivalent Units of Production (As per part a)
1,230
1,180
Cost per Equivalent Unit of Production
$853.25
$1,266.53
Assigning Costs:
Direct materials
Conversion
Total
Completed and transferred Out
$964,172.50
(EUP 1130*853.25)
$1,431,178.90
(EUP 1130*1266.53
$2,395,351.40
Ending work in process
$85,325.00
(EUP 100*853.25)
$63,326.50
(EUP 50*1266.53)
$148,651.50
Total Cost assigned
$1,049,497.50
$1,494,505.40
$2,544,002.90
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