Problem 16-4A (Part Level Submission) Rivera Company has several processing depa
ID: 2423556 • Letter: P
Question
Problem 16-4A (Part Level Submission)
Rivera Company has several processing departments. Costs charged to the Assembly Department for November 2014 totaled $2,359,918 as follows.
Production records show that 34,870 units were in beginning work in process 30% complete as to conversion costs, 663,600 units were started into production, and 24,800 units were in ending work in process 40% complete as to conversion costs. Materials are entered at the beginning of each process.
Determine the assignment of costs to goods transferred out and in process.
Costs accounted for:
Transferred out
Work in process, November 30
Materials
Conversion costs
Total costs ______________
Work in process, November 1 Materials $78,760 Conversion costs 48,100 $126,860 Materials added 1,597,568 Labor 225,100 Overhead 410,390Explanation / Answer
Answer:
In the question method of stock valuation is not given. I am solving this question by Weighted Average Method
In Weighted Average Method, % of work completion of Opening WIP Inventory is ignored. It only consider Closing WIP work completion and value the closing inventory by taking all the cost opening as well as cost incurred during the period..
We need to calculate Equivalent Production Units before apportionment of cost.
Output
Units
Material
Conversion
% of Completion
Equivalent Units
% of Completion
Equivalent Units
Units completed and transferred out (note 1)
673,670
100%
673,670
100%
673,670
Closing WIP (given)
24,800
100%
24,800
40%
9,920
698,470
683,590
Note 1: Units completed and transferred out = Opening WIP + New Units Introduced in process – Closing WIP = 34,870 + 663,600 – 24,800 = 673,670
Statement of Cost per Equivalent Unit
Material Cost = Opening Material Cost + Material Cost incurred during the period = $78,760 + $1,597,568 = $1,676,328
Material Cost per Equivalent Unit = Total Material Cost / Equivalent Units = $1,676,328 / 698,470 = $2.40 per unit
Total Conversion Cost = Opening + Added during the period = $48,100 + $225,100 + $410,390 = $683,590
Conversion Cost per Equivalent Unit = Total Conversion Cost / Equivalent Units = $683,590 / 683,590 = $1
Total Cost per Equivalent Unit = Material Cost + Conversion Cost = $2.40 + $1 = $3.40 per Equivalent Unit
Output
Units
Material
Conversion
% of Completion
Equivalent Units
% of Completion
Equivalent Units
Units completed and transferred out (note 1)
673,670
100%
673,670
100%
673,670
Closing WIP (given)
24,800
100%
24,800
40%
9,920
698,470
683,590