Problem 2: ABC Corporation uses the process costing system. Beginning inventory

Question

Problem 2: ABC Corporation uses the process costing system. Beginning inventory was 3,000 actual units 30% completed with value of $30,000. Direct materials were transferred into the process was 10,000 units at a cost of $75,000. The ending inventory was 4.000 units, 25% completed. Direct labor $91,000 and factory overhead $45,500. Complete the chart and answer the following questions. Actual | % | EUP Materials Conversion Total Costs Costs Beginning Inventory Started & Completed Ending Inventory

Explanation / Answer

UNITS TO ACCOUNT FOR: Beginning Work in Process units 3,000 Add: Units Started in Process 10,000 Total Units to account for: 13,000 UNITS TO BE ACCOUNTED FOR: Units completed from Beginning WIP 3000 Units started and completed 6,000 Ending Work in Process 4,000 Total Units to be accounted for: 13,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units completed from Beg. WIP 70% 2,100 70% 2,100 Units started and completed 100% 6,000 100% 6,000 Ending Work in Process 100% 1,000 80% 1,000 Total Equivalent units 9,100 9,100 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 75,000 136,500 Equivalent Units 9,100 9,100 Cost per Equivalent unit 8.24 15 TOTAL COST ACCOUNTED FOR: Units Completed from Beginning WIP (3000 units) Equivalent unit Cost per EU Total Cost Beginning Cost 30000 Material 2,100 8.24 17304 Conversion Cost 2,100 15 31500 Cost of units completed from Beg WIP 78804 Units started and Transferred out (6000 units) Equivalent unit Cost per EU Total Cost Material 6,000 8.24 49440 Conversion Cost 6,000 15 90000 Total Cost of Units completed and transferred out: 139440 Ending Work in process (4,000 units) Equivalent unit Cost per EU Total Cost Material 1,000 8.24 8240 Conversison Cost 1,000 15 15000 Total cost of Ending Work in process: 23,240 Actual % EUP material Conversion Total cost Beginning Inventory 3000 70% 2100 17304 31500 78804 Started and completed 6000 100% 6000 49440 90000 139440 Ending inventory 4000 25% 1000 8240 15000 23240 TOTAL EUP: 9100 units Material cost of Ending inv. 8240 Cost of completed units: 218244 Cost of units started and completed 139440 Beginning WIP of next month 23240

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