In August, 45,000 units were started into production and 5,000 of these were sti
ID: 2604782 • Letter: I
Question
In August, 45,000 units were started into production and 5,000 of these were still being worked on at the end of August. This ending inventory had 70% of the materials and 20% of the conversion costs already added as of August 31.
The Accounting Department tells you that August costs are $65,250 for materials and $82,000 for conversion costs.
Prepare the production cost report for August:
In September, 70,000 units were started into production and 10,000 were still being worked on at the end of the month. This ending inventory had 40% of the materials and 10% of the conversion costs already added as of September 30.
the September costs are $84,450 for Materials and $113,500 for labor and overhead combined.
Prepare the production cost report for September.
Explanation / Answer
this answer was calculated on equivalent weighted avg. method.
Please note all values are in %.
In case of any clarification required please comment.
Calcualtion of valuation of WIP Ending at the end of august % Complete Particulars Physical Units Material conversion WIP, Begnning 0 0 0 started into production 45000 Completed and transferred out 40000 WIP, Ending 5000 70 20 Particulars Material conversion Cost added during the month 65250 82000 Total cost incurred till date 65250 82000 Particulars Physical Units Material conversion Units completed and transferred out 40000 40000 40000 WIP Ending (Physical units * respective department completion%) 5000 3500 1000 Total Equivalent units 45000 43500 41000 Calcualtion of Equivalent units cost for Direct material and conversion costs Particulars Material conversion Total cost incurred in the month of august 65250 82000 Total equivalent units 43500 41000 Equivalent Cost per unit (A)/(B) 1.5 2 Calculation of equivalent cost per unit and assign cost to the units completed and units in Ending WIP Particulars Material conversion Units completed and transferred out 40000 40000 Cost assign to completed and trasnferred out units (1.5*40000),(2*40000) 60000 80000 WIP Ending equivalent units 3500 1000 Cost assign to WIP Ending equivalent unit 5250 2000