ACCT 320: Cost Accounting Mid-Term Exam Spring 2018 Problem #01: (50 points) Swa

Question

ACCT 320: Cost Accounting Mid-Term Exam Spring 2018 Problem #01: (50 points) Swasey Fabrication, Inc. of Tulsa, Oklahoma, manufactures frames for motorcycles. Each frame passes through three process departments:() Cutting,(2) Welding, and 6) Painting. In February 2018, the Cutting Department reported the following data: a) In cutting, all direct materials are added at the beginning of the production process b) Beginning work in Process consisted of 40,000 units, 20% complete with respect to conversion costs. Costs in the Beginning Work in Process included direct materials for 500,000; direct labor for $300,00; and applied factory overhead for $156,000. Costs added to production during the month of February 2018 were direct materials for $2,565,000; direct labor for $3,471,150; overhead was assigned to production based on activity-based costing using the following information: c) Activity Rate $150 per inspection hour 5,000 inspection hours $750 per maintenance hour 3,000 maintenance hours $300 per receiving order Activity Driver Usage Activity Inspection Maintenance Receiving Welding Department, leaving 14,000 units in the ending Work in Process, completed up to 25%. d) At the end of the month, 122,000 units were finished and transferred out to the Required: Prepare Swasey February production report using the FIFO method (please show clearly all calculations; round unit costs to cl osest two decimals)

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 40,000 Add: Units Started in Process 96,000 Total Units to account for: 136,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 40000 Units started and completed 82,000 Ending Work in Process 14,000 Total Units to be accounted for: 136,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 0% 0 20% 8,000 Units started and completed 100% 82,000 100% 82,000 Ending Work in Process 100% 14,000 25% 3,500 Total Equivalent units 96,000 93,500 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 2,565,000 7,071,150 Equivalent Units 96,000 93,500 Cost per Equivalent unit 26.72 75.63 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (40000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 956000 Material 0 26.72 0 Conversion Cost 8,000 75.63 605040 Cost of units completed from Beg WIP 1561040 Units started and Transferred out (82000 units) Equivalent unit Cost per EU Total Cost Material 82,000 26.72 2191040 Conversion Cost 82,000 75.63 6201660 Total Cost of Units completed and transferred out: 8392700 Ending Work in process (14,000 units) Equivalent unit Cost per EU Total Cost Material 14,000 26.72 374080 Conversison Cost 3,500 75.63 264705 Total cost of Ending Work in process: 638,785 Note: Total conversion cost for the period: Labour cost 3471150 OH cost Inspection (5000 inspection horurs@150) 750000 maintenance (3000 hours @750) 2250000 Receiving (2000 orders @300) 600000 Total conversion cost 707150

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