Dee Electronics makes game consoles in threww processes: assembly, programing, a

Question

Dee Electronics makes game consoles in threww processes: assembly, programing, and pakcaging.Direct materials are added at teh beginning of the assembly process. Conversion cost are incurred evenly throughout the process. The assembly Department jad no Work-in-Process Incentory on October 31st. In min-november, Dee Electronics started producion on 100,000 game consoles. Of this number, 90,000 game consoles were assembled during November and transferred out to the Programming Department. The November 30 Work-in-Process Inventory in the Asswmbly Department was 35% of the way through the assembly process. Direct materials costing 399,000 were placed in production in Assembly during November, direct labor of 139,000 was assigned, and manufactuing overhead of 130,280 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for November. The company uses the weighted-average method.

2.Prepare a T-account for Work-in -Process Inventory-Assembly to show its activity during November, including the November 30 balance.

Explanation / Answer

1. Production Cost Report (assembly Department)

Units Introduced( worked) in 1,00,000 units $ 3,99,000

Add: Direct Labour $ 1,39,000

Prime Cost for assembly deptt $ 5,38,000

Add: Manufacturing OH $ 1,30,280

Factory Cost $ 6,68,280

Less: Transferred to Programming Division 90,000 units $ 6,18,300

Closing Work in Progress of Assembly Division 10,000 units $ 49,980

2. Dr WIP Assembly Inventory A/c Cr  

Op Balance brought down Nil WIP transferred to Production Deptt $ 6,18,300

Direct Material $3,99,000

Direct Labor $ 1,39,000

Manufacturing OH $ 1,30,280 Closing Bal Carried forward(30 Nov) $ 49,980

Total $ 668280 Total $ 668280

Equivalent units for Labor and Manufacturing OH = 90000+ 35% of 10000 = 93,500 units

WIP closing balance = Direct Material + Direct Labor + Manufacturing OH

= 3.99*10000 + {(139000+130280)*3500/93500}

= $ 49,980

Units Transferred to Programming div = Direct Material + Direct Labor + Manufacturing OH

= 3.99*90000 + {(139000+130280)*90000/93500}

= $ 6,18,300

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