Cost of Units Completed and in Process The charges to Work in Process—Assembly D

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.

Cost per equivalent units of $1.40 for Direct Materials and $4.10 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.

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 unitincrease, decrease, or remain the same for the current period?

Work in Process—Assembly Department Bal., 6,000 units, 75% completed 25,500 To Finished Goods, 138,000 units ? Direct materials, 141,000 units @ $1.4 197,400 Direct labor 403,400 Factory overhead 156,865 Bal. ? units, 35% completed ?

Explanation / Answer

Question - a

(1) Cost of Beginning WIP = 25500 + 6150 = 31650

Existing cost of the WIP = 25500 ( Given)

Cost to complete = 0 * 1.40 + 6000 Units * 0.25 * 4.10 = 6150

Here we have 6000 units. There 100% already completed in respect of material and 75% in respect of conversion. So in the current month 0% of material and 25% of conversion shall be applied for their completion

(2) Cost of Units transfered out to finished goods

cost of Beginning WIP + Cost of Units started and completed in the period.

= 31650 + 132000 Units * ( 1.40 + 4.10 ) = 757650

(3) Cost of ending WIP

Beginning WIP of 6000 + Introduced into process of 141000 = 147000 in the process. Out these 138000 were finished and transfered out. Which mean 147000 - 138000 = 9000 Units were in process at the end of the period

= 9000 * 100% * 1.40 + 9000 * 35% * 4.10 = 25515

(4) Cost per Unit of completed beginning WIP = 31650 / 6000 = 5.28

Question - b

Cost of Beginning WIP at current rates = 6000 Units * 1.40 + 4500 Units * 4.10 = 26850

But the same Beginning WIP at previous year rates = 25,500 ( given )

So .......... Yes, Production cost Increased ( changed) from the preceding period.

Question - c

Conversion costs per Equivalent Unit increase for the current period.

Because, we see ( in question - b) that there is Increase in the total cost during the currentperiod. If it not due to material, it should be due to conversion cost.

Kindly rate / comment for any futher assistence .............. wish you all best.

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