Question

Burleson Company manufactures car seats in its Denver plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. (Click the icon for Burleson's process-costing system information.) Data for the assembly department for October 2017 are as follows: E: (Click the icon to view the assembly department data.) Read the requirements. Requirement 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. Physical Units Equivalent Units Direct Conversion Materials Costs Flow of Production Work in process beginning Started during current period To account for Completed and transferred out during current period Work in process, ending Accounted for Work done to date Requirement 2. What issues should the manager focus on when reviewing the equivalent-unit calculations? To show better performance, a department supervisor might report a degree of completion resulting in cost per equivalent unit and operating income. In other words, estimates of degree of completion can help managers should ask supervisors specific questions about the process they followed. Top management should always emphasize This emphasis drives throughout the organization. Requirement 3. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit. Begin by summarizing the total assembly department costs for October 2017. Total Direct Conversion Production Costs Materials Costs Total costs to account for Now calculate the cost per equivalent unit for each cost category

Answer 1

Requirement 1 Physical Units 4000 Equivalent Units Direct Conversion Materials Cost Units to be accounted for Work in process beginning (Material - 100% completed, Conversion - 45% completed) Started during current period To account for Completed and transferred out during current period Work in process ending (Material - 100% completed, Conversion - 65% completed) Accounted for Work done to date 22500 26500 26000 500 26000 500 26000 325 26500 26500 26325 Requirement 2 To show better performance, a department supervisor might report a Higher degree of completion resulting in Understated cost per quivalent unit and Overstated operating income. In other words, estimates of degree of completion can help Smooth earnings from one period to next. To guard against the possibility of bias managers should ask supervisors specific questions about the process they followed. Top management should always emphasize obtaining the correct answer, regardless of how it affects reported performance. This emphasis drives ethical actions throughout the organization. Requirement 3 Total Direct Conversion Production Materials Cost Costs $1,489,650 $ 1,248,000 $ 241,650 $ 7,210,125$ 4,635,000 $ 2,575,125 $8,699,775 $ 5,883,000 2,816,775 Work in process beginning Costs added in current period (given) Total costs to account for $ Cost per equivalent unit for each category Costs incurred to date Divide by equivalent units of work done to date Cost per Equivalent Unit 5,883,000 $ 2,816,775 26,500 26,325 222 $ 107 $ Requirement 4 Completed and Transferred out Total Direct Conversion Production Materials Cost Costs $8,554,000 $ 5,772,000 $ 2,782,000 (26000 * 222) (26000 * 107) $ 145,775 $ 111,000 $ 34,775 (500 * 222) (325 * 107) $8,699,775$ 5,883,000 $ 2,816,775 Work in process, Ending Total costs to account for Note : Direct materials are added at the beginnig of the process, so that the Degree of completion is 100% for Direct Materials. Note: Please Comment down for any further clarifications.