Nonuniform Inputs, Transferred-In Cost Drysdale Dairy produces a variety of dair

Question

Nonuniform Inputs, Transferred-In Cost Drysdale Dairy produces a variety of dairy products. In Department 12, cream (transferred in from Department 6) and other materials (sugar and flavorings) are mixed at the beginning of the process and churned to make ice cream. The following data are for Department 12 for August: Production: Units in process, August 1, 25% complete* 40,000 Units completed and transferred out 120,000 Units in process, August 31, 60% complete* 30,000 *With respect to conversion costs. 1. Prepare a physical flow schedule for the month. Drysdale Dairy Physical Flow Schedule For the Month of August Units to account for: Units in beginning work in process Units started Total units to account for Units accounted for: Units transferred out Units in ending work in process Total units accounted for 2. Using the weighted average method, calculate equivalent units for the following categories: transferred-in, materials, and conversion. Transferred-In equivalent units Materials equivalent units Conversion equivalent units

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Explanation / Answer

UNITS TO ACCOUNT FOR: Units in beginning work in process 40000 Units started 110000 Total units to account for 150000 Equivalent units UNITS ACCOUNTED FOR: Transferred in Materials Conversion Units transferred out 120000 120000 120000 120000 Units in ending work in process 30000 30000 30000 18000 Total units accounted for 150000 150000 150000 138000 NOTE: Under the weighted average method, the beginning work in process is considered as introduced and completed during the period; ie: 100% of the beginning WIP is completed during the period. Thus, the equivalent units for begnning wip will be 100% for materials and conversion. In this problem the 120000 units completed and transferred would include 100% for beginning wip and 100% for units introduced and completed during the period. Units transferred out will be UNITS ACCOUNTED FOR - ENDING WIP UNITS = 150000-30000 = 120000. These units will have 100% weightage. Hence, equivalent units would be 120000 for transferred in, materials and labor. But ending WIP will have only 30000*60% for conversion. For transferred in and materials it will be 100% as they are added in the beginning.

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