Samantha's Winter Shop sells high quality snowboards that is distributed to all the retailers in the region.
Question:
Samantha's Winter Shop sells high quality snowboards that is distributed to all the retailers in the region. The process in making a snowboard first starts off in the cutting department where it gets perfectly shaped and then the finishing department where it's sanded and painted in bright colours. Once they are done in the finishing department, they are ready for sale.
The following information relates to the finishing process in January.
Units | Transferred-In | DM | Conversion Costs | |
Units in beginning WIP Inventory | 400 | |||
Beginning WIP Inventory degree of completion | 100% | 0% | 30% | |
Costs in beginning WIP Inventory | $750 | 0% | $787 | |
New Units Started | 9600 | |||
Costs added to WIP Inventory this period | $18,000 | $3,500 | $10,550 | |
Units Completed | 9200 | |||
Units in ending WIP Inventory | 800 | |||
Ending WIP Inventory degree of completion | 100% | 0% | 30% |
Samantha uses the FIFO method of process costing.
Required:
1) Determine equivalent units for transferred-in costs, DM, and Conversion costs for the finishing department in January by completing steps 1 and 2 of the template
2) Determine Samantha's cost per equivalent unit for all cost categories and assign costs to units completed and to units in ending WIP Inventory-Finishing by completing Steps 3-5 of the template.
3) Do you think this method accurately reflects how the work in the finishing department is done? Explain your reasoning.
Accounting Information Systems basic concepts and current issues
ISBN: 978-0078025334
3rd edition
Authors: Robert Hurt