Hearty Soup Co. uses a process cost system to record the costs of processing sou

Question

Hearty Soup Co. uses a process cost system to record the costs of processing soup, which requires the cooking and filling processes. Materials are entered from the cooking process at the beginning of the filling process. The inventory of Work in Process-Filling on April 1 and debits to the account during April 2016 were as follows:

4,112

During April, 800 units in process on April 1 were completed, and of the 7,400 units entering the department, all were completed except 600 units that were 90% completed.

Charges to Work in Process-Filling for May were as follows:

During May, the units in process at the beginning of the month were completed, and of the 9,600 units entering the department, all were completed except 250 units that were 35% completed.

Bal., 800 units, 30% completed: Direct materials (800 × $4.3) $3,440 Conversion (800 × 30% × $1.75) 420 $3,860 From Cooking Department, 7,400 units $32,560 Direct labor 8,528 Factory overhead

4,112

Explanation / Answer

3) Cost per eq unit reduced in May for material and increased in May for conversion costs.

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Factory production report April : Physical units Transferred in Conversion costs total wip OB 800 560 Units Started and completed 6800 6800 6800 Tranf. Out 7600 wip CB 600 600 540 Equivalent units 7600 7900 Cost incurred 32560 12640 cost per Eq unit 4.28 1.6 Cost of Op wip 3440 420 Incurred on OP wip 0 896 Total cost of Op wip 3440 1316 4756 Cost of Started & comp 29132.63 10880 40012.63 Total cost of Tranf out 44768.63 Cost of wip CB 2570.53 864 3434.53 Factory production report May : Physical units Transferred in Conversion costs total wip OB 600 60 Units Started and completed 9350 9350 9350 Tranf. Out 9950 wip CB 250 250 87.5 Equivalent units 9600 9497.5 Cost incurred 44160 17096 cost per Eq unit 4.60 1.80 Cost of Op wip 2570.53 864 Incurred on OP wip 0 108.00 Total cost of Op wip 2570.53 972.00 3542.53 Cost of Started & comp 43010 16830.49 59840.49 Total cost of Tranf out 63383.03 Cost of wip CB 1150.00 157.50 1307.50 1a) WIP ACCOUNT (April): DEBIT AMOUNT $ CREDIT AMOUNT $ OB 3860 FG -Tranf out 45517.47 WIP-Cooking dep. 32560 CB 3542.53 Payroll expense 8528 Factory overhead 4112 Total 49060 Total 49060 1b) i) Equi units = Mate = 7600 and Conv = 7900 ii) Cost per Eq unit : Mat = $4.28 and Conv = $1.60 iii) Cost of goods finished = $45517.47 iv) Cost of wip CB = $3542.53 2a) WIP ACCOUNT (April): DEBIT AMOUNT $ CREDIT AMOUNT $ OB 3542.53 FG -Tranf out 63491.03 WIP-Cooking dep. 44160 CB 1307.50 Payroll expense 12008 Factory overhead 5088 Total 64798.53 Total 64798.53 2b) i) Equi units = Mate = 9600 and Conv = 9497.50 ii) Cost per Eq unit : Mat = $4.60 and Conv = $1.80 iii) Cost of goods finished = $63491.03 iv) Cost of wip CB = $1307.50

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