Pittsburgh Aluminum Company uses a process cost system to record the costs of ma

Question

Pittsburgh Aluminum Company uses a process cost system to record the costs of manufacturing rolled aluminum, which consists of the smelting and rolling processes. Materials are entered from smelting at the beginning of the rolling process. The inventory of Work in Process-Rolling on September 1 and debits to the account during September were as follows: Bal,' 600 units, 20% completed: Direct materals (600 x 5.8) Conversion (600 x 20% x $2.4) $3,480 3,768 $77,172 21,190 11,410 From Smelting Department, 13,080 units Direct labor Factory overhead Dunn g September, 600 units in process on September 1 were completed, and of the 13,000 units entering the department, all were completed except 1 300 units that were 60% completed. Charges to Work in Process-Rolling for October were as follows: From Smelting Department, 15,000 units Direct labor Factory overhead $91,500 26,090 90% completed.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Cost per equivalent unit of direct material increased from august to october. The cost per equivalent unit for conversion costs increased from august to october. These changes must be investigated for their underlying causes and any necessary corrective action should be taken.

Pittsburgh Aluminum Company Rolling Department - For the month of September Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 600 Units started this period 13080 Total unit to be accounted for 13680 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 80% 600 0 480 Started and completed currently 11780 11780 11780 Units in ending WIP
Material - 100%
Conversion - 60% 1300 1300 780 Total units accounted for 13680 13080 13040

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