The Assembly Department uses a process cost accounting system and a weighted-ave
ID: 2333407 • Letter: T
Question
The Assembly Department uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $137,100 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of material costs and $13,000 of conversion costs. Other data for the month of July are as follows: (40% complete) 25,000 units 70,000 units 30,000 units Beginning work in process inventory, 7/1 Units completed and transferred out (30% complete) Ending work in process inventory, 7/31 Instructions Answer the following questions and show computations to support your answers. 1. How many physical units have to be accounted for in July? 2. What are the equivalent units of production for materials and for conversion costs for the month of July? 3. What is the total cost assigned to the 70,000 units that were transferred out of the process in July? 4. What is the total cost of the July 31 inventory?Explanation / Answer
Requirement 1
Units
Reconciliation of Units
A
Opening WIP
25,000
B
Introduced
75,000
C=A+B Units to account for
TOTAL
100,000
D
Transferred
70,000
E=C-D
Closing WIP
30,000
Answer-: Units to Account for 100000
Requirement 2
Statement of Equivalent Units
Material
Conversion Cost
Units
Complete %
Equivalent units
Complete %
Equivalent units
Transferred
70,000
100%
70,000
100%
70,000
Closing WIP
30,000
100%
30,000
30%
9,000
Total
100,000
Total
100,000
Total
79,000
Equivalent units
Material----------- 100000 Units
Conversion cost---- 79000 Units
Requirement 3
Working – Cost per Equivalent unit
Cost per Equivalent Units
COST
Material
Conversion Cost
TOTAL
Beginning WIP Inventory Cost
$ 80,000.00
$ 13,000.00
$ 93,000.00
Cost incurred during period
$ 190,000.00
$ 137,100.00
$ 327,100.00
Total Cost to be accounted for
$ 270,000.00
$ 150,100.00
$ 420,100.00
Total Equivalent Units
100,000
79,000
Cost per Equivalent Units
$ 2.7000
$ 1.9000
Statement of cost
Cost
Equivalent Cost/unit
Transferred
Units
Cost Allocated
Material
$ 2.70
70,000
$ 189,000.00
Conversion Cost
$ 1.90
70,000
$ 133,000.00
TOTAL
$ 322,000.00
Answer-: Cost assigned to goods transferred out -- $ 322,000.
Requirement 4
Statement of cost
Cost
Equivalent Cost/unit
Ending WIP
Units
Cost Allocated
Material
$ 2.70
30,000
$ 81,000.00
Conversion Cost
$ 1.90
9,000
$ 1,170.00
TOTAL
$ 404,170.00
TOTAL
$ 82,170.00
Answer-: Cost assigned to July 31 Inventory -- $ 82,170.
Notes
Units
Reconciliation of Units
A
Opening WIP
25,000
B
Introduced
75,000
C=A+B Units to account for
TOTAL
100,000
D
Transferred
70,000
E=C-D
Closing WIP
30,000
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