Question

The following information is available from the Oils Division of Glasgow Corporation for December. Conversion costs for this division were 80 percent complete as to beginning work-in-process inventory and 60 percent complete as to ending work-in-process inventory. Information about conversion costs follows: Units 109,000 S 427,280 549,000 2,544,480 409,000 Costs WIP at December 1 (80% complete) Units started and costs incurred during December Units completed and transferred to next department during December The Oils Division uses FIFO Required: a-1. Compute the equivalent units for conversion costs. Equvalent units a-2. Compute the cost per equivalent unit for conversion costs. (Round your answers to 2 decimal places.) t unit a-3. What was the conversion cost of work-in-process inventory in the Oils Division at December 31? (Do not round intermediate calculations.) cost b. What were the conversion costs per equivalent unit produced last period and this period, respectively? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Cost per unit Previous period Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo, and UrLife. Production takes place in two departments, Assembly and Special Packaging. The Basic and Photo models are complete after Assembly. The UrLife model goes from Assembly to Special Packaging and is completed there. Data for July are shown in the following table. Conversion costs are allocated based on the number of units produced. There are no work-in-process inventories. Basic (40,000 units) $ 488,000 Photo (32,000 units) S 1,208,000 Total (8,000 units) S 304,000 $ 2,000,000 $1,884,000 $ 2,492,000 Materials Conversion costs: Assem 608,000 Special Packaging Total conversion costs Required: a. What is the cost per unit transferred to finished goods inventory for each of the three phones in July? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Cost Per Unit Basic Photo UrLife b. The UrLife model is sold only to the govenment on a cost-plus basis. The marketing vice president suggests that conversion costs in Assembly could be allocated on the basis of material costs so he can offer a lower price for the Basic model. 1. What cost would be reported for the three models if the marketing vice president's suggestion is adopted? (Do not round intermediate calculations. Round your answers to 2 decimal places) Cost Per Unit Basic Photo UrLife

Answer 1

Solution a1:

Glasgow Corporation
Olis division
Computation of Equivalent unit (FIFO)
Particulars	Physical units	Conversion
Units to be accounted for:
Beginning WIP Inventory	109000
Units started this period	549000
Total unit to be accounted for	658000
Units Accounted for:
Units completed and transferred out
From beginning inventory Conversion - 20%	109000	21800
Started and completed currently	300000	300000
Transferred to finished goods	409000	321800
Units in ending WIP Conversion - 60%	249000	149400
Total units accounted for	658000	471200

Solution a2:

Glasgow Corporation
Olis division
Computation of Cost per Equivalent unit
Particulars	Conversion
Current period cost	$2,544,480.00
Equivalent units	471200
Cost per equivalent unit	$5.40

Solution a3:

Conversion cost work in process inventory at Dec 31 = 149400*$5.40 = $806,760

Solution b:

Conversion cost per equivalent unit of last period = Conversion cost in beginning WIP / Equivalent units in beginning WIP

= $427,280 / (109000*80%) = $4.90 per unit

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