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| During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 54,000 were in process in the production department at the beginning of April and 290,000 were started and completed in April. April’s beginning inventory units were 70% complete with respect to materials and 30% complete with respect to labor. At the end of April, 70,000 additional units were in process in the production department and were 60% complete with respect to materials and 20% complete with respect to labor. |
| The production department had $700,000 of direct materials and $600,000 of direct labor cost charged to it during April. Also, its beginning inventory included $90,000 of direct materials cost and $30,000 of direct labor. |
| 1&2. | Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit and assign April’s costs to the department’s output. (Round “Cost per EUP” to 2 decimal places.) |
Equivalent units of production (EUP)- weighted average method Units % Materials EUP-Materials 344,000 42,000 386,000 % Labor EUP- Labor 100% 20% 100% 344,000 70,000 414,000 nits completed and transferred out 344,000 14,000 358,000 60% nits of ending goods in process Equivalent units of production Cost per equivalent unit of production Costs of beginning goods in process Costs incurred this period Total costs ÷ Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) Total costs to account for: Materials Labor 90,000 700,000 S 790,000 386,000 2.05 30,000 600,000 S 630,000 358,000 1.76 EUP EUP irect labor – prior period irect materials – current period 0.00 Total costs to account for Total costs accounted for Difference due to rounding cost/unit Cost Assignment and Reconciliation Cost of units transferred out 0.00 EUP Cost per EUP Total cost Direct materials Direct labor Total costs transferred out Costs of ending goods in process EUP Cost per EUP Total cost Direct materials 0.00 0.00
Expert Answer
Solution:
Equivalent units and cost per equivalent units are correct. Rest of the solution as follows:
| Total cost to account for: | |
| Direct material – prior period | $90,000 |
| Direct labour – prior period | $30,000 |
| Direct material – current period | $700,000 |
| Direct labour – current period | $600,000 |
| Total costs to account for | $ 1,420,000 |
| Total costs accounted for | $ 1,421,380 |
| Difference due to rounding cost/unit | $ 1,380 |
Cost assignment and reconciliation:
| Cost of units transferred out | EUP | cost per EUP | total cost | |
| Direct material | 344,000 | $2.05 | $705,200 | |
| Direct labour | 344,000 | $1.76 | $605,440 | |
| Total costs transferred out | $1,310,640 | |||
| Costs of ending work in process: | ||||
| Direct material | 42000 | $2.05 | $86,100 | |
| Direct labour | 14,000 | $1.76 | $24,640 | |
| Total ending goods in process | $110,740 | |||
| Total costs accounted for | $1,421,380 | |||
