# Question & Answer: Exercise 1) Having Fun Filters produces an air filter for use in accounting classrooms. Parts are added at several points in their production process. In August, produc…..

Exercise 1 – Weighted Average Method

• Cost per Equivalent Unit calculation
 Opening WIP 1400 Introduced 6400 Equivalent units TOTAL 7800 Direct Material Direct labour manufacturing Overhead (-)Transferred 6200 6200 (100%) 6200 (100%) 6200 (100%) Closing WIP 1600 800 (50%) 640 (40%) 640 (40%) TOTAL equivalent units (B) 7000 6840 6840
 Total Cost Direct Material Direct labour manufacturing Overhead TOTAL Opening WIP 33000 35000 94000 162000 Cost added 253810 97542 612348 963700 TOTAL cost (A) 286810 132542 706348 1125700 Cost per Equivalent units Direct Material Direct labour manufacturing Overhead Total Cost (A) 286810 132542 706348 Units (B) 7000 6840 6840 Cost/unit (A/B) 40.97 19.38 103.27
• Cost of Item completed in August and Closing WIP
 Cost of Items Completed Units Closing WIP Units 6200 Units Cost DM @40.97 254031.7 800 32778.29 DL @ 19.38 120140.4 640 12401.59 MO @103.27 640257 640 66091.04 TOTAL 1014429 TOTAL 111270.9

Exercise 2 – FIFO Method

• Cost per Equivalent Unit calculation
 Opening WIP 1400 Introduced 6400 TOTAL 7800 (-)Transferred 6200 * 1400 completed from Opening WIP, remaining completed 4800 during the month Closing WIP 1600
 Equivalent units Units Direct Material Direct labour manufacturing Overhead (Op WIP)1400 420 (30%) 560 (40%) 560 (40%) (Remaining)4800 4800 (100%) 4800 (100%) 4800 (100%) (Closing WIP)1600 800 (50%) 640 (40%) 640 (40%) 7800 6020 6000 6000 Total Cost Direct Material Direct labour manufacturing Overhead TOTAL Opening WIP 33000 35000 94000 162000 Cost added 253810 97542 612348 963700 TOTAL cost 286810 132542 706348 1125700 Cost per Equivalent units Direct Material Direct labour manufacturing Overhead Total Cost 286810 132542 706348 Units 6020 6000 6000 Cost/unit 47.64 22.09 117.72
• Cost of Item completed in August and Closing WIP
 Opening WIP Completed Closing WIP Cost Units Cost Units Cost Units Cost Direct Material @ 47.64 420 20010 4800 228685.7 800 38114.29 Direct labour @ 22.09 560 12370.59 4800 106033.6 640 14137.81 manufacturing Overhead @ 117.72 560 65925.81 4800 565078.4 640 75343.79 Total Cost \$ 1,125,700 98306.4 899797.7 127595.9

Exercise 3 – Weighted Average Method

• Cost per Equivalent Unit calculation
 Opening WIP 2500 Introduced 9370 Equivalent units TOTAL 11870 Direct Material Direct labour manufacturing Overhead (-)Transferred 6660 6660 (100%) 6660 (100%) 6660 (100%) Closing WIP 5210 4115.9 (79%) 1667.2 (32%) 1667.2 (32%) TOTAL equivalent units 10775.9 8327.2 8327.2 Total Cost Direct Material Direct labour manufacturing Overhead TOTAL Opening WIP 41785 25110 14445 81340 Cost added 25054 30456 34344 89854 TOTAL cost 66839 55566 48789 171194 Cost per Equivalent units Direct Material Direct labour manufacturing Overhead Total Cost 66839 55566 48789 Units 10775.9 8327.2 8327.2 Cost/unit 6.20 6.67 5.86
• Cost of Item completed and Closing WIP
 Cost of Items Completed Units Closing WIP Units 6660 Units Cost DM @6.2 41309.56 4115.9 25529.44 DL @ 6.67 44441.06 1667.2 11124.94 MO @5.86 39020.89 1667.2 9768.112 TOTAL 124771.5 TOTAL 46422.49

Exercise 4 – FIFO Method

• Cost per Equivalent Unit calculation
 Opening WIP 2500 Introduced 9370 TOTAL 11870 (-)Transferred 6660 * 2500 completed from Opening WIP, remaining completed 4160 during the month Closing WIP 5210 Equivalent units Units Direct Material Direct labour manufacturing Overhead 2500 1050 (42%) 1825 (73%) 1825 (73%) 4160 4160 (100%) 4160 (100%) 4160 (100%) 5210 4115.9 (79%) 1667.2 (32%) 1667.2 (32%) 11870 9325.9 7652.2 7652.2 Total Cost Direct Material Direct labour manufacturing Overhead TOTAL Opening WIP 41785 25110 14445 81340 Cost added 25054 30456 34344 89854 TOTAL cost 66839 55566 48789 171194 Cost per Equivalent units Direct Material Direct labour manufacturing Overhead Total Cost 66839 55566 48789 Units 9325.9 7652.2 7652.2 Cost/unit 7.17 7.26 6.38
• Cost of Item completed in August and Closing WIP
 Opening WIP Completed Closing WIP Cost Units Cost Units Cost Units Cost Direct Material @ 7.17 1050 7525.381 4160 29814.84 4115.9 29498.78 Direct labour @ 7.26 1825 13252.13 4160 30207.6 1667.2 12106.27 manufacturing Overhead @ 6.38 1825 11635.86 4160 26523.38 1667.2 10629.76 Total Cost \$ 171,194 32413.37 86545.82 52234.81