Conversion Cost DM for beginning work in process as of March 1st $140

Conversion Cost DM for cost adding during March 1st $2,163

textbook p 297

Business Inc. produces all of its products in one department, The Production Department, and transfers the costs to finished goods. The production department adds all direct materials at the beginning of the process, Inspection takes place at the end of the process and are considered abnormal spoilage. In March the department reported the following data: Beginning work in process as of March 1st 2000 units 30% Complete Cost of Direct materials $500 Costs added during March Cost of Direct materials $1,625 During March: 6.500 units Started 7000 Good units were transferred out to Finished goods, 500 units remained in ending work in process. 45% Complete Required: Answer the following requirements under each of the 8 areas. You must use cell referencing in your calculations to 1. Prepare a physical flow schedule like page 297 shown as step 1 in the area below. 2. Calculate equivalent units of production using the weighted average method for direct materials and conversion costs like th 3. Calculate the unit cost. 4. Calculate the cost of goods transferred out. 5. Calculate ending Work in process. 6. Calculate the loss due to abnormal spoilage. 7. Prepare the journal entry that transfers the goods from the production department to Finished goods. Chapter 6 Process Costing Beginning work in process (BWIP). February 1: 100,000 pounds, 40 percent complete with respect to conversion costs. The costs assigned to this work are as follows: Direct materials $20,000 Direct labor 10.000 Overhead 30,000 Ending work in process (EWIP), February 28: 50,000 pounds, 60 percent complete with respect to conversion costs. Units completed and transferred out: 360,000 pounds. The following costs were added during the month: Direct materials S211.000 Direct labor 100,000 Overhead 270.000 d All units are inspected at the 80 percent point of completion, and any spoiled units iden- tified are discarded. During February, 10,000 pounds were spoiled. flow schedule. We can look at the five steps of the cost of production report. First, we must create a physical 100,000 320,000 420,000 Units to account for: Units, beginning work in process Units started Total units to account for Units accounted for: Units transferred out Units spoiled Units, ending work in process Total units accounted for 360,000 10.000 50.000 420.000 The second step is the creation of a schedule of equivalent units, shown below. Direct Materials Conversion Costs Units completed 360,000 360,000 Units spoiled X Percentage complete: Direct materials (10,000 X 100%) 10,000 Conversion costs (10,000 X 80%) 8,000 Units in ending work in process X Percentage complete: Direct materials (50,000 X 100%) 50,000 Conversion costs (50,000 X 60%) 30,000 Equivalent units of output 420,000 398,000 The cost per equivalent unit is as follows: S0.55 DM unit cost (S20,000+ $211.000420,000 CC unit cost (S40,000 + S370,000/398,000 Total cost per equivalent unit 1.03 S1.58 * Rounded Now we must process. If the spoila 1ood units. In this Vote, none of the sp en complete and we must calculate the cost of goods transferred out and the cost of ending work in the spoilage is normal (expected), the cost of spoiled units is added to the cost of the In this case, the inspection occurred at the 80 percent point of completion. There of the spoiled units are from ending work in process (as these units are only 60 per- ste and have not yet been inspected). Thus, all spoilage cost is assigned to the good is transferred out (continued)