108 CHAPTER 20 B-20.04 Allocating costs to production Zeus Corporation produces

Question

108 CHAPTER 20 B-20.04 Allocating costs to production Zeus Corporation produces cultured diamonds via a secretive process that grows the diamonds in a chamber filled with a carbon gas cloud. The diamonds are produced in a single continuosci uses the weighted-average process costing method of accounting for production. process, and Zeu Below is the company's calculation of cost per equivalent unit for October. During October, the c completed and transferred 8,000 diamonds to finished goods. An additional 4,000 units were still in at the end of the month. The ending work in process was 60% complete with respect to direct materia 40% complete with respect to both elements of conversion cost. s and Prepare a schedule showing the allocation of total cost between finished goods and ending work in process Cost Per Equivalent Unit: Conversiorn Total Cost 3,900,000 9.300,000 $13,200,000 Direct Materials Direct Labor 780,000 2,325,000 $3,105,000 9,600 $323.44 Factory Overhead $1,950,000 5,115,000 s706500 +9,600 $735.94 Beginning Work in Process Cost incurred during period Total Cost Equivalent Units Cost per Equivalent Unit $1,170,000 1860,000 $3,030,000 10,400 291.35 $1,059.38 $1,350.72

Explanation / Answer

ans)

Equivalent Units:

Conversion

Total cost Direct materials Direct labour   Factory overhead

Transferred to Finished Goods $10,805,760 8,000 8,000 8,000

(8000 X 1350.72)

Ending Work in Process

incurredMaterials ( 2400 X 291.35) $699,240 2,400(4000 X 60%)

incurred Conversion cost 1,695,000 1,600 1,600(4000 X 40%)

(1600 X 1059.38)

Total Ending Work in Process $2,394,240

Total Cost Allocation $13,200,000

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