Global Manufacturing uses a process costing system to accumulate production cost

Question

Global Manufacturing uses a process costing system to accumulate production costs. The following information pertains to August Beginning work in process inventory: 4,000 units, 20% complete; Raw materials-$10,000 Conversion costs-$ 9,650 Cost incurred in August: Materials used $ 60,500; conversion costs, $ 43,800 Total units completed: 19,000 Ending work in process inventory: 3,000 units, 30% complete Number of units started during August: 18,000 All materials are introduced at the start of the process, and conversion costs are incurred uniformly throughout manufacturing. Units pass directly from Global's sole production department to the finished goods warehouse. Prepare a production cost report in good form (the five steps ). A. Use the FIFO method B. Use the Average method

Explanation / Answer

b. Direct material Conversion

     Unit to be accounted for:

Beginning work in process 4000

units started in 18000

22000

Units accounted for

Unit completed and transferred 19000 19000 19000

Ending work in process 3000    3000 900 [3000*0.30]

   22000 22000 19900

Cost to be accounted for:

Beginning work in process 10000 9650

Add: Cost incurred during the month 60500 43800

Total cost to be accounted for $70500 $53450

Cost per equivalent unit $3.2 $2.69

Cost assigned to units transferred out $60800 $51110

Ending work in process $9600 $2440

        Total cost accounted for $70400 $53550

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