A firm produces its product by a continuous process involving three production d

Question

A firm produces its product by a continuous process involving three production department, 1 through 3. Present entries to record the following selected transactions related to production during August:

a) materials purchesed on account, $120,000

b) materials requisitioned for use on Department 1, $125,700, of which $124,200 entered directly into product

c) labor cost incurred in Dept 1, $195, 400, of the high $174,000 was used directly in the manufacture of the product.

d) FO costs for Dept 1 incurred on account, $54,700

e) depreciation on the machinery in adept 1, $29,000

f) Expiration of prepaid insurance charge led to Dept 1, $7,000

g) FO applied to production in Dept , $106,300

h) Output of Dept 1 transferred to Depr 2, $362,700

11) The following information relates to a company X for the month of November

Beg. Work process

Direct materials, 100% complete

conversion cost, 70% complete

Units started in Nov,, 14,000

Nove Costs charged to WIP:

Direct material costs, $57,400

Direct labor costs, $20,049

FO costs. $30,073

Ending WIP: Nov. 30. 1,500 units

Direct materials, 100% complete

Conversion costs, 30% complete

Using the FIFO method I need to calculate the following

a) the equivalent units for materials and conversion costs

b) the cost per equivalent unit of materials and conversion cost.

Explanation / Answer

11) Units completed and Transfered in NoVember = 1800+14000- 1500 = 14300 out of which 1800 is transfered from Beginning Inventory so units completed and transfered from those started in Nov = 14300-1800 = 12500 units

Material conversion cost Beginning WIP - 540            [1800*.30] Started and completed 12500 12500 Ending WIP 1500 450                [1500*.30] Equivalent units [a]       [Ans to part a] 14000 13490 cost     [b] 57400 50122     [20049+30073] cost per equivalent units   [b/a] [Ans to part B] 4.1 per unit 3.71 per unit

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