Question

Cost of Units Completed and in Process

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Work in Process—Assembly Department
Bal., 5,000 units, 40% completed	11,900	To Finished Goods, 115,000 units	?
Direct materials, 118,000 units @ $1.5	177,000
Direct labor	200,100
Factory overhead	77,820
Bal., ? units, 35% completed	?

Cost per equivalent units of $1.50 for Direct Materials and $2.40 for Conversion Costs.

a. Based on the above data, determine the different costs listed below.

If required, round your interim calculations to two decimal places.

1. Cost of beginning work in process inventory completed this period	$
2. Cost of units transferred to finished goods during the period	$
3. Cost of ending work in process inventory	$
4. Cost per unit of the completed beginning work in process inventory (Rounded to the nearest cent.)	$

b. Did the production costs change from the preceding period?

c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?

Answer 1

Answer:

Note : Using FIFO Method

Balance Closing Unit = Opening + Introduced - Closing = 5,000 + 118,000 - 115,000 = 8,000

Cost per Unit

Particulars	Units	%age completed during the year	Material	%age completed during the year	Labor + Factory overhead
Cost			177,000		277,920
Equivalent units
Opening	5,000	0	0	60%	3,000
Introduced	110,000	100%	110,000	100%	110,000
Closing	8,000	100%	8,000	40%	3,200
Total	123,000		118,000		116,200
Cost per unit			1.50		2.40

a)

i) Cost of beginning work in progress

= opening cost + opening equivaent material units X Cost per unit + Opening equivalent overhead unit X cost per unit

= 11,900 + ( 0 X 1.50 ) + ( 3,000 X 2.40)

= 19,100

ii) Cost of units transfered to finished goods i.e 115,000 units

= opening completed goods cost + cost of Units started and completed during year

= 19,100 + (110,000 X 1.50) + ( 110,000 X 2.40)

= 448,100

iii) Cost of ending work in progress

= Cost of equivalent material unit X cost per unit + Cost of equivalent overhead units X Cost per unit

= 8,000 X 1.50 + 3,200 X 2.40

= 19,680

IV) Cost per unit of the completed beginning work in process inventory

= Opening Cost / Opening completed units

= 19,100 / 5,000

= 3.82

b) Yes it is changed by ( 1.50 + 2.40) - 3.82= $ 0.08

C) Increases

Previous cost = 3.82 - 1.50 = 2.32

Current cost = 2.32

increase = 0.08