Nelson Corporation Nelson Corporation has the following information available fo

Question

Nelson Corporation Nelson Corporation has the following information available for May of the current year: Beginning Work in Process Inventory 10,000 units 120,000 units (25% complete as to conversion) Started Ending Work in Process Inventory (30% complete as to conversion) 30,000 units Beginning Work in Process Inventory Costs: Material Conversion $ 2,100 2,030 Current Period Costs: 33,000 109,695 Material Conversion All material is added at the start of production and all products completed are transferred out. 1. Calculate the total equivalent units of production (Total EUP) using the (a) FIFO and (b) weighted average method. 2. Calculate cost per equivalent unit using the (a) FIFO and (b) weighted average method. 3. Calculate transferred out costs and the cost of Ending Work in Process Inventory using the (a) FIFO and (b) weighted average method Prepare all required journal entries for the month of May 4.

Explanation / Answer

FIFO method Beggining units 10000 Transferred out 1,00,000 Started into production 120000 Ending units 30,000 130000 130000 Equivalent units Material Conversion Beginning units 10000 10000 Completion in current period 0% 75% A 0 7500 Units started and completed 90000 90000 Completion 100% 100% B 90000 90000 Ending Units 30,000 30,000 Completion 100% 30% C 30000 9000 Total units A+B+C 120000 106500 Cost per equivalent units Per unit cost Cost Total units Per unit cost Material cost 33000 120000 0.28 Conversion cost 109695 106500 1.03 Total 142695 1.31 Cost of goods sold Material convertion cost Beginning inventory completed Completion 0% 75% Per unit cost 0.28 1.03 Units 10000 10000 Total cost   A 0.00 7725 7725 Units started and completed Completion 100% 100% Per unit cost 0.28 1.03 Units 90000 90000 Total cost    B 24750 92700 117450 Beginning work in progress C 2100 2030 4130 Total cost A+B+C 129305 Ending work in progress Completion 100% 30% Per unit cost 0.28 1.03 Units 30,000 30,000 Total cost     8250 9270 17520 Weighted average cost Beggining units 10000 Transferred out 1,00,000 Started intro production 120000 Ending units 30,000 Units accounted for 130000 130000 Equivalent units Material Conversion cost Units transferred                      A 100000 100000 Ending Units 30,000 30,000 Completion 100% 30% B 30000 9000 Total units 130000 109000 Cost per equivalent units Particulars Material Conversion cost total As at beginning 2100 2030 4130 Added during the month 33000 109695 142695 Cost to be accounted for 35100 111725 146825 Total eqivalent units 130000 109000 Cost per equivalent unit 0.27 1.03 1.30 Cost per equivalent unit = Cost to be accounted for / Total equivalent units Cost of ending work in progress Conversion cost Particulars Material Total Ending units 30,000 30,000 Cost per equivalent units 0.27 1.03 Completion 100% 30% Total cost 8100 9225 17325 Cost of goods transferred Conversion cost Particulars Material Total Number of units 100000 100000 Cost per equivalent units 0.27 1.03 1.30 Total amount 27000 102500 129500

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