New Image Sports uses a process-costing system. For March, the company had the f
ID: 2466203 • Letter: N
Question
New Image Sports uses a process-costing system. For March, the company had the following activities:
Beginning work-in-process inventory (1/3 complete) 7,200 units
Units placed in production 28,800 units
Good units completed 21,600 units
Ending work-in-process inventory 12,000 units
Cost of beginning work in process $ 6,000
Direct material costs, current $21,600
Conversion costs, current $14,400
Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. Ending WIP is 60% completed as to conversion.
Required: Prepare a production cost worksheet using the FIFO method.
Explanation / Answer
Answer:
Normal spoilage = 7200+28800-21600-12000 = 2400
Started and completed = 21600 - 7200 = 14400
Assignment of costs:
Work in process, beginning .......................................................................... $ 6,000
Completion of beginning (4,800 x $0.50) ..........................................................$ 2,400
Total beginning inventory................................................................................$ 8,400
Started and completed (14400 x $1.25) ..........................................................$ 18000
Normal spoilage (2,400 x $1.25)......................................................................$ 3000
Total costs transferred out ..............................................................................$ 29400
Work in process, ending Direct materials (12,000 x $0.75).... $9000
Conversion (12,000 x $0.50 x 0.6)........................................$3600....................$ 12600
Total cost.......................................................................................................$42000
Production cost worksheet Flow of production Physical units Direct material Conversion Work in process, beginning 7200 Started during period 28800 To account for 36000 Good units completed: Beginning work in process 7200 4800 Started and completed 14400 14400 14400 Normal spoilage 2400 2400 2400 Work in process, ending 12000 12000 7200 Accounted for 36000 28800 28800 Costs Total Direct material conversion Work in process, beginning $ 6,000.00 Costs added during period $ 36,000.00 $ 21,600.00 $ 14,400.00 Total costs to account for $ 42,000.00 $ 21,600.00 $ 14,400.00 Divided by equivalent units $ 28,800.00 $ 28,800.00 Equivalent unit cost $ 1.25 $ 0.75 $ 0.50