Badgersize Company has the following information for its Forming Department for

Question

Badgersize Company has the following information for its Forming Department for the month of August

Assume materials are added at the start of processing.

Required:

a. Calculate the equivalent units for the Forming Department for the month of August.

b. Find the cost per equivalent unit of input resource. (Round your answers to 2 decimal places.)

Work in Process Inventory, August 1: 20,000 units Direct materials: 100% complete $ 80,000 Conversion: 20% complete 24,000 Balance in work in process, August 1 $ 104,000 Units started during August 47,000 Units completed and transferred in August 57,000 Work in process (70% complete), August 31 ? Costs charged to Work in Process in August Direct materials $ 142,000 Conversion costs: Direct labor $ 104,000 Overhead applied 137,000 Total conversion $ 241,000

Explanation / Answer

Solution a:

It is assumed that company uses FIFO method to account for cost of ending WIP and units transferred out.

Solution b:

Badgersize Company Forming Department Computation of Equivalent unit (FIFO) Particulars Physical units Material Conversion Units to be accounted for: Beginning WIP Inventory 20000 Units started this period (25700+2600-2300) 47000 Total unit to be accounted for 67000 Units Accounted for: Units completed and transferred out From beginning inventory
Material - 0%
Conversion - 80% 20000 0 16000 Started and completed currently 37000 37000 37000 Units in ending WIP
Material - 100%
Conversion - 70% 10000 10000 7000 Total units accounted for 67000 47000 60000

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