Kimbeth Manufacturing uses a process cost system to manufacture Dust Density for
ID: 2420007 • Letter: K
Question
Kimbeth Manufacturing uses a process cost system to manufacture Dust Density for the mining industry. The following information pertains to operations for the month of May 2015:
Units
Beginning work-in-process, May 1 10,000
Started in production during May 90,000
Completed production during May 84,000
Ending work-in-process inventory, May 31 16,000
The beginning inventory was 50% complete for materials and 30% for conversion costs. The ending inventory was 60% complete for materials and 25% complete for conversion costs.
Costs pertaining to the month of May are as follows:
Beginning inventory costs are materials, $54,560; conversion costs $35,560.
Costs incurred during May are materials used, $468,000; conversion costs $574,040.
Using the weighted-average method, prepare a complete production cost report showing the computations of:
1) equivalent units of production for materials and conversion costs,
2) the costs per equivalent unit for materials and conversion costs for the month,
3) the cost of ending work-in-process inventory and the cost of the units transferred out to the next department, and
4) a cost reconciliation report for the month.
Explanation / Answer
Equivalent units of production for materials and conversion costs: Materials conversion costs 1 Opening inventory 50% 5000 70% 7000 Started during May & finished 100% 74000 100% 74000 Closing inventory 60% 9600 25% 4000 Total 88600 85000 2 The costs per equivalent unit for materials and conversion costs for the month: Materials conversion costs Costs incurred during month 468000 574040 No. of equivalent units 88600 85000 Cost per equivalent unit 5.28 6.75 3 The cost of ending work-in-process inventory and the cost of the units transferred out to the next department: A. Ending WIP Materials conversion costs Equivalent Units Equivalent cost per unit Equivalent Units Equivalent cost per unit 9600 5.28 4000 6.75 Total 50708.80 27013.65 As method is not given. Assuming FIFO method is applicable. B. Calculatiion of weighted average cost per unit Total Beginning Inventory Cost Total Cost 54560 Total Cost 35560 90120 Cost incurred during this month on opening inventory 5000 5.28 7000 6.75 Total Cost of opening inventory transferred 26410.84 47273.88 73684.72 Cost incurred during this month on inventory started during this month. 74000 5.28 74000 6.75 Total Cost of started inventory transferred 390880.36 499752.47 890632.8 Closing stock 9600 5.28 4000 6.75 Total Cost of closing inventory transferred 50708.80 27013.65 77722.45 Total 1132160
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