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1. Process Costing Laura Houldsworth Co., manufactures porcelain dolls that go through three processing departments prior to completion. Information about work in the first department, Molding, is given below for Jul roduction Data Units in process, July 1 (materials 100% complete; conversion 90% complete) Units Started into production during Jul Units completed and transferred out Units in process, July 31, (materials 40% complete, conversion 10% complete) 15.000 July160,000 155,000 | Cost data Work in process invento ry, July I S14,100 S22,680 Materials cost Cost added during Jul Material Cost $142,380 237,940 Materials are added at several stages during the cooking process, whereas labor and overhead costs are incurred uniformly. The company uses the weighted-average method Required (1) Compute the equivalent units of production. (2) Compute the costs per equivalent unit for the month (3) Determine the cost of ending work in process inventory and of the units transferred out to the next department (4) Prepare a cost reconciliation between the costs determined in part (3) above and the cost of beginning work in process inventory and costs added in July
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Requirement-1: Under FIFO method, equivalent units would consist efforts required to complete the beginning inventory, efforts put for completed and transferred out goods and ending inventory. As the materials are introduced at the beginning itself, beginning inventory is 100% complete in terms of materials, 0% efforts would be required in current process or period whereas conversion costs would require the uncompleted portion of costs in current process or period. So 15,000 160,000 Units in beginning inventory Add: Units added during the period Less: Units completed and transferred out Units in ending inventory ($155,000)> 15,000 units shall be from beg. inventory; Balance 140,000 units from current process. 20,000 Equivalent Units of Production (EUP) Whole Units EUP EUP Conversion Particulars Conversio MaterialsMaterials Beginning work in process Started, Completed and transferred Transferred to Finished Goods Ending work in process Equivalent Units of Production (EUP) 15,000 140,000 155,000 20,000 175,000 0% 100% 10% 100% | | 1,500 140,000 141,500 2,000 143,500 [15,000 units x 0%; 15,000 units x 10%) | 140,000 units x 100%; 140,000 units x 100%) | | 140,000 140,000 8,000 148,000 40% 10% | [20,000 units x 40%; 20,000 units x 10%)Requirement-2: Direct Materials Cost per equivalent units of production Conversion Cost of beginning work in process Cost added during the period Total Materials Costs & Conversion Costs Equivalent units of Production (EUP Cost per Equivalent units of Production [Under FIFO method, it shall not be considered here] $142,380$237,940 [Conversion $21,650+$16,870 $38,520] $142,380$237,940 148,000 143,500 [As computed EUP schedule presented above] $0.9620$1.6581 [$123,840 12,900 units-$9.60; $38,520 /12,840 units-$3.00] Requirement-3: Cost per EUP Cost of goods completed & transferred EUP Totals Materials - Beginning cost Conversion Beginning Cost Cost of goods completed & trfd from beginning 14,100 [Given] $22,680Given] $36,780 140,000 $0.9620 $134,684 [140,000 units x $0.9620] 141,500 $1.6581 $234,624 [141,500 units x $1.6581] Materials Current Cost Conversion - Current Cost Cost of goods completed & trfd from current Total Cost of goods completed & transferred $369,308 $406,088 [$36,780+ $369,308]Cost per Cost of ending work-in-process Material:s Conversion Total cost of ending work-in-process EUP Totals 8,000 2,000 EUP $0.9620 $7,696 [8,000 units x $0.9620] $1.6581 $3,316 [2,000 units x $1.6581] $11,012 Requirement-4: Production Cost Report Costs to account for: Beginning Work in Process Costs started this period $36,780 [$14,100+ $22,680] $380,320 [$142,380+$237,940] 417,100 Total Costs to account for Costs accounted for: Completed and transferred out Ending work in process $406,088 [As calculated in Requirement-3] $11,012 [As calculated in Requirement-3] 417,100 Total Costs accounted for

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