This exercise relates to the Double Diamond Skis’ Shaping and Milling Department that was discussed earlier in the chapter. The Excel worksheet form that appears below consolidates data from Exhibits 5–5 and 5–8. The workbook, and instructions on how to complete the file, can be found in Connect.

You should proceed to the requirements below only after completing your worksheet.

Required:

1. Check your worksheet by changing the beginning work in process inventory to 100 units, the units started into production during the period to 2,500 units, and the units in ending work in process inventory to 200 units, keeping all of the other data the same as in the original example. If your worksheet is operating properly, the cost per equivalent unit for materials should now be $152.50 and the cost per equivalent unit for conversion should be $145.50. If you do not get these answers, find the errors in your worksheet and correct them.

How much is the total cost of the units transferred out? Did it change? Why or why not?

2. Change all of the numbers in the Data area of your worksheet so that it looks like this:

What is the cost of the units transferred out?

3. What happens to the cost of the units transferred out in part (2) above if the percentage completion with respect to conversion for the beginning inventory is changed from 20% to 40% and everything else remains the same? What happens to the cost per equivalent unit for conversion? Explain.

Transcribed Image Text:

3 Data 4 Beginning work in process inventory: 5 Units in process 6 7 8 Completion with respect to materials Completion with respect to conversion Costs in the beginning work in process inventory: Materials cost 9 10 Conversion cost 11 Units started into production during the period 12 Costs added to production during the period: 13 Materials cost 14 Conversion cost 15 Ending work in process inventory: 16 Units in process 21 22 23 17 Completion with respect to materials 18 Completion with respect to conversion 19 20 Enter a formula into each of the cells marked with a ? below Weighted-Average method: 24 25 26 Units transferred to the next department 27 Ending work in process inventory. 28 Materials 29 Conversion Equivalent Units of Production 30 Equivalent units of production 31 32 33 34 Cost of beginning work in process inventory 35 Costs added during the period 36 Total cost Costs 37 Equivalent units of production 38 Cost per equivalent unit 39 40 41 42 Ending work in process inventory: 43 Equivalent units of production 44 Cost per equivalent unit Cost of ending work in process inventory $368,600 $350,900 45 46 47 Units completed and transferred out: 48 Units transferred to the next department Cost per equivalent unit 49 50 Cost of units transferred out 51 52 53 Costs to be accounted for: 200 55% 30% $9,600 $5,575 5,000 Cost Reconciliation Materials 400 40% 25% Equivalent Unit 54 Cost of beginning work in process inventory Costs added to production during the period 55 56 Total cost to be accounted for 57 Costs accounted for as follows: 58 Cost of ending work in process inventory Cost of units transferred out 59 60 Total cost accounted for ? ? Conversion 2 2 Materials Costs of Ending Work in Process Inventory and the Units Transferred Out Materials Conversion Total ? ? 2 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Conversion ? 2 ? ? ? 2 ? ? ? ? ?