Newton Corporation uses a process costing system to trace costs through several
ID: 340950 • Letter: N
Question
Newton Corporation uses a process costing system to trace costs through several phases of produc- tion, starting with the Blending Department and ending with the Packaging Department. Recent computer problems have caused some of the company’s accounting records to be destroyed. Shown below is a partial summary of information retrieved by accountants from the Blending Depart- ment’s February production cost report:
Cost Data: Blending Department
Direct materials costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . .
$ 12,000
Conversion costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . . . . . .
25,200
Direct materials costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162,000
Conversion costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
271,000
Cost per equivalent unit of conversion in February. . . . . . . . . . . . . . . . . . . . . . . .
5
Physical Units: Blending Department
Units in process, February 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
?
Units transferred out during February. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,000
Units started in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,000
Units in process, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,000
Percentage of Completion: Blending Department
Direct materials, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100%
Conversion, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
?
Direct materials, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100%
Conversion, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
a. Compute the number of units that were in the Blending Department’s beginning inventory on February 1.
b. Compute the number of units that were started and completed by the Blending Department in February.
c. Compute the cost per equivalent unit of direct materials and conversion carried forward from
January and assigned to the Blending Department’s beginning inventory on February 1.
d. Compute the Blending Department’s cost per equivalent unit of direct materials consumed in
February.
Cost Data: Blending Department
Direct materials costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . .
$ 12,000
Conversion costs in beginning inventory, February 1 . . . . . . . . . . . . . . . . . . . . . .
25,200
Direct materials costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162,000
Conversion costs incurred in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
271,000
Cost per equivalent unit of conversion in February. . . . . . . . . . . . . . . . . . . . . . . .
5
Physical Units: Blending Department
Units in process, February 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
?
Units transferred out during February. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,000
Units started in February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,000
Units in process, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,000
Percentage of Completion: Blending Department
Direct materials, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100%
Conversion, February 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
?
Direct materials, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100%
Conversion, February 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Explanation / Answer
Req a: Units acounted for: units completed and transferred out 58000 Add: Ending WIP units 2000 Total units acccounted for 60000 Less: Units started in the production -54000 Units In the beginning work in process inventory 6000 Req b: Units started and completed by Blending deptt: Total units completed 58000 Less: Units completed from beginning WIP -6000 Units started and completed by Blending deptt: 52000 Req c: Total Equivalent units of conversion in current month based on FIFO: Total cost incurred: 271000 Divide: Conversion cost per unit 5 Equivalent conversion cost units 54200 Less: equivalent units of units strated and completed 52000 Less: equiv. units of Ending WIP (2000*20%) 400 Equivalent units of Beginning WIP completed during the month 1800 Therfore percentage completion:70% Material and conversion cost per unit in Beg.WIP Material Conversion Cost in beginning WIP 12000 25200 UNIts 6000 6000 % coompletion 100% 70% Equivalent units 6000 4200 Cost per equivalent units 2 6 Req D: Equivalent units of material: Units started and completed 52000 Add: Equiv. units of ending WIP(2000*100%) 2000 Total equivalent units 54000 Total material cost 162000 Material cost pepr equiv. units 3