Cost of Units Completed and in Process The charges to Work in Process—Assembly D
ID: 2340563 • Letter: C
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 $1.90 for Direct Materials and $4.30 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?
Yes
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?
Increase
Explanation / Answer
Step for solution
Step 1
Equivalent Units of production = Physical units multiplied by % of competition
Step 2
Calculate total cost to be accounted for
Step 3
Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4
Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5
Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For direct material 100% unit completed it means remaining 0% completed in this month.
For conversion cost 30% unit completed it means (100-30) remaining 70% completed in this month.
Company Name
Assembly Department production Report
First in First out (FIFO) Method
Month ended
Summary of Physical units
Units in beginning WIP inventory
4000
Units started during month
94000
Total unit to be accounted for
98000
Units completed and transferred out
92000
Units in ending WIP inventory (98000-92000)
6000
Total unit accounted for
98000
Equivalent Units of production
Particulars
Physical units
Direct material
Conversion Cost
%
Units
%
Units
Units in beginning WIP inventory
4000
0%
0
70%
2800
Units in Started and completed (92000-4000)
88000
100%
88000
100%
88000
Units in ending WIP inventory
6000
100%
6000
30%
1800
Equivalent Units of production
94000
92600
Summary of cost to be accounted
Direct material
Conversion Cost
Total
Cost in beginning WIP
7600
4800
12400
Cost incurred during Month (Add)
178600
398180
576780
Total cost to be accounted for
186200
402980
589180
Cost per Equivalent Unit
Cost incurred during Month
178600
398180
Equivalent Units of production
94000
92600
Cost per Equivalent Unit
1.90
4.30
6.20
Assign costs to units transferred out and units in ending WIP inventory
Cost assigned to units transferred out
Direct material
7600
Conversion Cost
4800
Cost in beginning WIP
12400
Direct material (0*1.9)
0
Conversion Cost (2800*4.3)
12040
Cost incurred for complete beginning WIP
12040
Direct material (88000*1.9)
167200
Conversion Cost (88000*4.3)
378400
Cost of units in Started and completed
545600
Cost assigned to units transferred out
570040
Cost assigned to units ending work in progress
Direct material (6000*1.9)
11400
Conversion Cost (1800*4.3)
7740
Cost assigned to units ending work in progress
19140
Total cost assigned
589180
Answer
Total
Per units
Remarks
Direct material in beginning WIP (4000*1.90)
7600
1.90
7600/4000
Conversion cost in beginning WIP (12400-7600)
4800
4.00
4800/(4000*30%)
Cost per unit in preceding period
5.90
1. Cost of beginning work in process inventory completed this period. (12400+12040)
$ 24,440
2. Cost of units transferred to finished goods during the period
$ 570,040
3. Cost of ending work in process inventory.
$ 19,140
4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent. (24440/4000)
$ 5.90
Current period cost per Equivalent Unit
6.20
Yes, production costs change from the preceding period
Per unit Conversion cost of preceding period
4.00
Per unit conversion cost of current period
4.30
Impact on per unit conversion cost
Increase
Step for solution
Step 1
Equivalent Units of production = Physical units multiplied by % of competition
Step 2
Calculate total cost to be accounted for
Step 3
Cost per Equivalent Unit =Cost incurred during Month / Equivalent Units of production
Step 4
Cost assigned to units transferred out = Cost in beginning WIP + Cost incurred for complete beginning WIP + Cost of units in Started and completed
Step 5
Cost assigned to units ending work in progress = equivalent units in ending WIP inventory * Cost per Equivalent Unit
For direct material 100% unit completed it means remaining 0% completed in this month.
For conversion cost 30% unit completed it means (100-30) remaining 70% completed in this month.