PART B. Problems 1. The CINE Division of OMAR Sports Equipment Company manufactu
ID: 2329204 • Letter: P
Question
PART B. Problems
1. The CINEDivision of OMAR Sports Equipment Companymanufactures baseball gloves in its Milwaukee plant. Two production departments are used in sequence: the Cutting Department and the Stitching Department. In the Cutting Department, direct material consisting of imitation leather is placed into production at the beginning of the process. Direct-labor and manufacturing overhead costs are incurred uniformly throughout the process. The material is rolled to make it softer and then cut into the pieces needed to produce baseball gloves.
Below is presented a summary of the activity and costs in the Cutting Department during March. The direct-material and conversion costs listed below for the March 1 work in process consist of costs that were incurred during February. These costs were assigned to the units remaining in process at the end of February.
INFORMATION
Work in process, March 1
25,000 units
Direct material: 100% complete, cost of
$143,000
Conversion: 40% complete, cost of
474,700
Balance in work in process, March 1
$617,700
Units started during March
30,000 units
Units completed during March and transferred out of the Cutting Department
35,000 units
Work in process, March 31
Direct Material: 100% complete
Conversion: 80% complete
Costs incurred during March:
Direct material
$165,000
Conversion costs:
Direct labor
$1,000,000
Applied manufacturing overhead
1,174,000
Total conversion costs
$2,174,000
Required: Weighted Average and FIFO methods
Prepare a physical flow schedule for the month of March.
Calculate equivalent units for materials AND equivalent units for conversion.
Calculate cost per equivalent unit for materials AND cost per equivalent unit for conversion.
Calculate the value of work in process inventory on March 31 and cost of goods transferred out during March.
Work in process, March 1
25,000 units
Direct material: 100% complete, cost of
$143,000
Conversion: 40% complete, cost of
474,700
Balance in work in process, March 1
$617,700
Units started during March
30,000 units
Units completed during March and transferred out of the Cutting Department
35,000 units
Work in process, March 31
Direct Material: 100% complete
Conversion: 80% complete
Costs incurred during March:
Direct material
$165,000
Conversion costs:
Direct labor
$1,000,000
Applied manufacturing overhead
1,174,000
Total conversion costs
$2,174,000
Explanation / Answer
Req 1. Physical Flow: UNITS TO ACCOUNT FOR: Beginning Work in Process units 25,000 Add: Units Started in Process 30,000 Total Units to account for: 55,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 35,000 Ending Work in Process 20,000 Total Units to be accounted for: 55,000 Req 2. Equivalent Units Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 35,000 100% 35,000 Ending Work in Process 100% 20,000 80% 16,000 Total Equivalent units 55,000 51,000 Req 3 Cost per unit TOTAL COST TO ACCOUNT FOR: Material Conversion Beginning work in Process 143,000 474,700 Cost Added during May 165,000 2,174,000 Total Cost to account for: 308,000 2,648,700 Total Cost to account for: 2,956,700 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 308,000 2,648,700 Equivalent Units 55,000 51,000 Cost per Equivalent unit 5.6 51.935 Req 4. TOTAL COST ACCOUNTED FOR: Units started and Transferred out (35,000 units) Equivalent unit Cost per EU Total Cost Material 35,000 5.6 196000 Conversion Cost 35,000 51.935 1817725 Total Cost of Units completed and transferred out: 2013725 Ending Work in process (20,000 units) Equivalent unit Cost per EU Total Cost Material 20,000 5.6 112000 Conversison Cost 16,000 51.935 830960 Total cost of Ending Work in process: 942,960
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