Amazon Co. manufactures a product called AWOL in a three-process series. All mat

Question

Amazon Co. manufactures a product called AWOL in a three-process series. All materials are introduced at the beginning of the first process. Amazon uses the first-in, first-out method of inventory costing. Unit and cost data for the first process (Department A) for the month of March 2017 follow: Cost 212,048 214,880 Conversion Units Completion Work in process inventory 40% 70% March 1 March 31 Direct materials cost Conversion cost 29,000 21,000 115,005 Completed in March 42,000 (1) Prepare Amazon's Department A cost of production report for March. (2) Compare the February and March cost per equivalent unit for direct materials and conversion, given the March 1 beginning inventory cost of direct materials was $180,960.

Explanation / Answer

CALCULATION SHOWING EQUIVALENT UNITS

  

CALCULATION OF PRODUCTION COST / EQ UNITS

  DIRECT MAT CONVERSION COST

OP WIP 180960 31088

INTRODUCED 214880 115005

COST OF PRODUCTION(A) 395840 146093

EQ UNITS(B) 13000 24600

COST/EQ UNITS $30.45 $5.94

CALCULATION OF CLOSING WIP

(21000UNITS * $30.45 + 14700UNITS * $5.94) = $726768

PARTICULARS MATERIAL CONVERSION COST DOC(%)     UNITS DOC(%) UNITS OP WIP - -    60 11600 INTRODUCED 100 13000 100 13000 TOTAL 13000 24600 CLOSING WIP 100 21000 70 14700

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