Compute the cost of goods transferred out in August and the cost of work-in-process ending inventory.
Explanation of Solution
Cost of units in ending work-in-
Cost of ending units in work-in-process is found out by multiplying equivalent unit in ending inventory by equivalent cost of ending inventory with respect to materials cost and conversion costs.
Conversion costs:
The total production cost or converting the product from raw material to final product that is ready to be transferred as finished goods, work-in-process or has started are taken into consideration for conversion costs.
Compute the total units for prior department, materials and conversion costs:
Particulars | Physical units | Prior department | Materials | Conversion costs |
Beginning work-in-process inventory | 12,500 | |||
Units started this period | 127,500 | |||
Total units | 140,000 | |||
Completed and transferred out | ||||
Beginning work-in-process inventory | 12,500 | 0 | 5,000 (1) | 7,500(2) |
Started and currently completed | 107,500 | 107,500 | 107,500 | 107,500 |
Units in ending work-in-process inventory | 20,000 | 20,000 | 18,000 (3) | 10,000 (4) |
Total units | 140,000 | 127,500 | 130,500 | 125,000 |
Table: (1)
Compute the cost per equivalent unit for prior department, materials and conversion costs:
Particulars | Total | Prior department | Materials | Conversion costs |
Costs in beginning work-in-process inventory | $ 323,400 | $ 98,000 | $ 164,400 | $ 61,000 |
Current period costs | $ 3,306,600 | $ 2,142,000 | $ 939,600 | $ 225,000 |
Total costs | $ 3,630,000 | $ 2,240,000 | $ 1,104,000 | $ 286,000 |
Cost per equivalent unit | ||||
Prior department | $ 16.80(5) | |||
Materials | $ 7.20(6) | |||
Conversion | $ 1.80(7) | |||
Table: (2)
Compute the total costs for prior department, materials and conversion costs:
Particulars | Total | Prior department | Materials | Conversion costs |
Transferred out: | ||||
Costs from beginning inventory | $ 323,400 | $ 98,000 | $ 164,400 | $ 61,000 |
Current costs beginning work-in-process inventory | ||||
Prior department | $ 0 | $ 0 | ||
Materials | $ 36,000 | $ 36,000(8) | ||
Conversion | $ 13,500 | $ 13,500(9) | ||
Total costs | $ 372,900 | |||
Current costs of units started and completed | ||||
Prior department | $ 1,806,000 | $ 1,806,000(10) | ||
Materials | $ 774,000 | $ 774,000(11) | ||
Conversion | $ 193,500 | $ 193,500(12) | ||
Total costs of units started and completed | $ 2,773,500 | |||
Total costs | $ 3,146,400 | $ 1,806,000 | $ 810,000 | $ 207,000 |
Current costs work-in-process ending inventory | ||||
Prior department | $ 336,000 | $ 336,000(13) | ||
Materials | $ 129,600 | $ 129,600(14) | ||
Conversion | $ 18,000 | $ 18,000(15) | ||
Total ending work-in-process inventory | $ 483,600 | |||
Total costs accounted for | $ 3,630,000 | $ 2,240,000 | $ 1,104,000 | $ 286,000 |
Table: (3)
Working note 1:
Compute the units completed and transferred out from beginning inventory of materials:
Working note 2:
Compute the units completed and transferred out from beginning inventory of conversion costs:
Working note 3:
Compute the units in ending work-in-process inventory for materials:
Working note 4:
Compute the units in ending work-in-process inventory for conversion costs:
Working note 5:
Compute the cost per equivalent unit for prior department costs:
Working note 6:
Compute the cost per equivalent unit for prior department costs:
Working note 7:
Compute the cost per equivalent unit for prior department costs:
Working note 8:
Compute the current costs added to complete beginning work-in-process inventory:
Working note 9:
Compute the current costs added to complete beginning work-in-process inventory:
Working note 10:
Compute the current costs of units started and completed:
Working note 11:
Compute the current costs of units started and completed:
Working note 12:
Compute the current costs of units started and completed:
Working note 13:
Compute the costs assigned to ending work-in-process inventory for materials:
Working note 14:
Compute the costs assigned to ending work-in-process inventory for materials:
Working note 15:
Compute the costs assigned to ending work-in-process inventory for materials:
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Chapter 8 Solutions
Fundamentals Of Cost Accounting (6th Edition)
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