Problem1 Process costing

Timing Tech, a manufacturing company, has two departments: Production department and Finishing department. Goods completed in the Production department are immediately sent to the Finishing department. The following data pertains to the Production department.

Physical Direct Material Direct Labor

Units Cost Cost

Beg. WIP inventory (Jan. 1 2014) 200,000 units $ 200,000 $ 315,000

Units Started during the year 1,000,000 units

Costs incurred during the year $1,300,000 $1,995,000

End. WIP inventory (Dec. 31 2014) 300,000 units

• Beg. WIP completion rate: Direct Material 100%, Conversion cost 50%

• End. WIP completion rate: Direct Material 100%, Conversion cost 80%

• The company uses normal costing for allocation of manufacturing overhead. The pre-determined allocation rate in 2013 and 2014 is 60% of direct labor cost.

Required) Answer the following questions using a) FIFO method and b) Weighted Average Method.

1. FIFO

1. What is the number of physical units for the following accounts:

Goods Completed ______________

WIP End. Balance ___________________

2. What is the cost per equivalent unit?

Direct Material $_______________

Conversion $_______________

3. Compute the cost assigned to goods completed/transferred-out to testing department and the cost assigned to WIP ending balance for the Production department.

Transferred-out $_________________

WIP ending balance $________________

Problem 1 Continued

2. Weighted average method

1. What is the number of physical units for the following accounts:

Goods Completed ______________

WIP End. Balance ___________________

2. What is the cost per equivalent unit?

Direct Material $_______________

Conversion $_______________

3. Compute the cost assigned to goods completed/transferred-out to testing department and the cost assigned to WIP ending balance for the Production department.

Transferred-out $_________________

WIP ending balance $________________