Shine Company uses a process cost system to account for the costs incurred in ma

Question

Shine Company uses a process cost system to account for the costs incurred in making its single product, a hair conditioner. This product is processed in Department A and then in Department B Materials are added in both departments. Production for May was as follows: Department Department Units started or transferred in Units completed and transferred out Stage of completion of May 31 inventory: 200,000 160,000 160,000 120,000 Materials Conversion 100% 50% 80% 40% Costs incurred this month: Direct materials costs Conversion costs $200,000 $540,000 $304,000 $272,000

Explanation / Answer

PRODUCTION COST REPORT FOR DEPARTMENT-A UNITS TO ACCOUNT FOR: Add: Units Started in Process 200,000 Total Units to account for: 200,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 160,000 Ending Work in Process 40,000 Total Units to be accounted for: 200,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 160,000 100% 160,000 Ending Work in Process 100% 40,000 50% 20,000 Total Equivalent units 200,000 180,000 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 200,000 540,000 Equivalent Units 200,000 180,000 Cost per Equivalent unit 1 3 TOTAL COST ACCOUNTED FOR: Units started and Transferred out (160,000 units) Equivalent unit Cost per EU Total Cost Material 160,000 1 160000 Conversion Cost 160,000 3 480000 Total Cost of Units completed and transferred out: 640000 Ending Work in process (40,000 units) Equivalent unit Cost per EU Total Cost Material 40,000 1 40000 Conversison Cost 20,000 3 60000 Total cost of Ending Work in process: 100,000 PRODUCTION COST REPORT FOR DEPARTMENT-B UNITS TO ACCOUNT FOR: Add: Units Started in Process 160,000.00 Total Units to account for: 160,000.00 UNITS TO BE ACCOUNTED FOR: Units started and completed 120,000.00 Ending Work in Process 40,000.00 Total Units to be accounted for: 160,000.00 Equivalent Units: Transferred in Cost Material Cost Conversion Cost % Completion Units % Completion Units % Completion Units Units started annd completed 100% 120,000.00 100% 120,000.00 100% 120,000.00 Ending Work in Process 100% 40,000.00 80% 32,000.00 40% 16,000.00 Total Equivalent units 160,000.00 152,000.00 136,000.00 COST PER EQUIVALENT UNIT: Transferred-in Material Conversion Cost added during the period 640,000 304,000 272,000 Equivalent Units 160,000.00 152,000.00 136,000.00 Cost per Equivalent unit 4.00 2.00 2.00 TOTAL COST ACCOUNTED FOR: Units started and Completed and Transferred out (120,000 units) Equivalent unit Cost per EU Total Cost Transferred-in cost 120,000 4 480000 Material cost 120,000 2 240000 Conversion Cost 120,000 2 240000 Total Cost of Units completed and transferred out: 960000 Ending Work in Process (40000 units) Equivalent unit Total Cost Transferred-in cost 40,000.00 4 160000 Material cost 32,000.00 2 64000 Conversion Cost 16,000.00 2 32000 Total cost of Ending Work in process: 256,000

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