Question

problem (100 points): Production Report under Process Costing: Springville Company produces a product that passes through two departments: Blending and Cooking. In the Blending Department, all materials are added at the beginning of the process. All other manufacturing inputs are added uniformly. The following information pertains to the Blending Department for February, 2014: a) BWIP, February 1: 100,000 pounds, 40% complete with respect to conversion costs with these related costs: Materials: $20,000; Labor: $10,000; Overhead: $30,000 h EWIP February 28: 50,000 pounds, 60 % complete with respect to conversion costs. Units completed and transferred out: 370,000 pounds. The following costs were added during the month: Materials: $211,000 Labor: $100,000 Overhead: $270,000 Required Questions: 1) Under the weighted Average Method (50 points): 1.1. 1.2. 1.3. 1.4. Prepare a physical flow schedule (10 points); Compute the equivalent units (10 points) Compute the unit costs (10 points) Present the valuation of inventories (10 points) Prepare cost reconciliation (10 points). 1.5. 2. Under the FIFO Method (50 points): 2.1. Prepare a physical flow schedule (10 points); 2.2. Compute the equivalent units (10 points) Compute the unit costs with two decimals (10 points) 2.4. Present the valorization of inventories (10 points) 2.5. Prepare cost reconciliation (10 points)

Answer 1

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Springville Company						Workings
Cost of Production Report	FIFO Method					Calculation of Direct materials received:		Note
	Whole Units	Equivalent Units				Completed during the month	370,000.00
		Material	Conversion			Add: closing	50,000.00
Physical Flow Schedule						Less: opening	100,000.00
Units charged to production:						Direct materials received	320,000.00	A
Inventory in process on Feb 1	100,000.00
Direct materials received	320,000.00			See Note A		Started and completed in Feb
Total units accounted	420,000.00					Goods finished in Feb-	370,000.00
						Less: Opening work in process	100,000.00
Equivalnet Units						Started and completed in Feb	270,000.00	B
Inventory in Process, Feb 1 (40% completed)	100,000.00	-	60,000.00
Started and completed in Feb	270,000.00	270,000.00	270,000.00	See Note B
Goods finished in Feb	370,000.00	270,000.00	330,000.00
Inventory in Process, Feb 28 (60% completed)	50,000.00	50,000.00	30,000.00
Equivalnet Units	420,000.00	320,000.00	360,000.00
COSTS				Total
Costs per equivalent unit
Total costs for Feb		211,000.00	370,000.00	581,000.00
Total equivalent units		320,000.00	360,000.00
Unit costs		0.66	1.03
Valuation of Inventories & Cost reconcilation
Inventory in Process, Feb 1				60,000.00
Costs incurred in Feb				581,000.00
Total costs accounted for				641,000.00
Costs allocated to completed and partially completed units
Inventory in Process, Feb 1				60,000.00
To complete Inventory in Process, Feb 1		-	61,666.67	61,666.67
Started and completed in Feb		178,031.25	277,500.00	455,531.25
Finished goods in Feb				577,197.92
Inventory in Process, Feb 28		32,968.75	30,833.33	63,802.08
Total costs assigned				641,000.00
Note: in FIFO method only production cost during the month is allocated among equivalent units.
Cost of Production Report	Weighted Average Method
	Whole Units	Equivalent Units
		Material	Conversion
Physical Flow Schedule
Units charged to production:
Inventory in process on Feb 1	100,000.00
Direct materials received	320,000.00			See Note A
Total units accounted	420,000.00
Equivalnet Units
Inventory in Process, Feb 1 (40% completed)	100,000.00	100,000.00	100,000.00
Started and completed in Feb	270,000.00	270,000.00	270,000.00	See Note B
Goods finished in Feb	370,000.00	370,000.00	370,000.00
Inventory in Process, Feb 28 (60% completed)	50,000.00	50,000.00	30,000.00
Equivalnet Units	420,000.00	420,000.00	400,000.00
COSTS				Total
Costs per equivalent unit
Total costs for Feb		231,000.00	410,000.00	641,000.00
Total equivalent units		420,000.00	400,000.00
Unit costs		0.55	1.03
Valuation of Inventories & Cost reconcilation
Inventory in Process, Feb 1				60,000.00
Costs incurred in Feb				641,000.00
Total costs accounted for				701,000.00
Costs allocated to completed and partially completed units
To complete Inventory in Process, Feb 1		55,000.00	102,500.00	157,500.00
Started and completed in Feb		148,500.00	276,750.00	425,250.00
Finished goods in Feb				582,750.00
Inventory in Process, Feb 28		27,500.00	30,750.00	58,250.00
Total costs assigned				641,000.00
Note: in Weighted Average method total cost (production+ Opening WIP) is allocated among equivalent units.