1. The inventory at May 1 and the costs charged to Work in Process--Department B
ID: 2543554 • Letter: 1
Question
1. The inventory at May 1 and the costs charged to Work in Process--Department B during May for Olga Company are as follows:
Beginning WIP – Dept B, 12,000 units, 60% completed
$ 62,400
From Department A, 55,000 units started this period
Direct materials added
115,500
Conversion costs incurred
523,160
During May, all direct materials are transferred from Department A, the units in process at May 1 were completed, and of the 55,000 units entering the department, all were completed except 6,000 units which were 70% completed. Assume inventories are managed by the first-in, first-out method.
a) Determine the Cost per Equivalent Units for both Direct Materials and Conversion Costs for the month of May.
b) Determine the total cost of production transferred to Department C and provide the journal entry.
c) What is the ending balance in WIP – Dept. B?
Beginning WIP – Dept B, 12,000 units, 60% completed
$ 62,400
From Department A, 55,000 units started this period
Direct materials added
115,500
Conversion costs incurred
523,160
Explanation / Answer
Answer a Calculation of equivalent units of production using FIFO method Physical Units % Complete with respect to Material cost Equivalent Units for Material cost % complete with respect to Conversion cost Equivalent Units for Conversion cost Units in Process at May-1 Completed and transferred 12000 40% 4800 Units introduced ,Completed and transferred 49000 100% 49000 100% 49000 Units in ending work in process 6000 100% 6000 70% 4200 Equivalent units of Production 55000 58000 Calculation of Cost per equivalent unit for Direct Material and Conversion costs for the month of May Direct Material Conversion Cost added $115,500.00 $523,160.00 / Equivalent Units of production 55000 58000 Cost per equivalent Unit $2.10 $9.02 Answer b Calculation of total cost of production transferred to Depatment C Cost of beginning work in process $62,400 Cost incurred during the period, On Beginning work in process = 4800 units * $9.02 - Conversion cost = 4800 units * $9.02 = $43,296 On Units introduced ,Completed and transferred - Material Cost = 49000 units * $2.10 = $102,900 - Conversion cost = 49000 units * $9.02 = $441,980 Total Cost of Production transferred to Department C $650,576 Journal Entry for Transfer of units from Dept.B to Dept.C Account Title Debit Credit Work in process - Department C $650,576.00 Work in process - Department B $650,576.00 Answer c Ending balance in WIP - Dept.B - Material Cost = 6000 units * $2.10 = $12,600.00 - Conversion cost = 4200 units * $9.02 = $37,884.00 Ending balance in WIP - Dept.B $50,484.00
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