Tavia Limited manufactures a plastic gasket that is used in

Tavia Limited manufactures a plastic gasket that is used in automobile engines. The gaskets go through three processing departments: Mixing, Forming, and Stamping. The company\'s accountant (who is very inexperienced) has prepared a summary of production and costs for the Forming Department for October as follows: Work in process inventory, October 1 (9,300 units materials 100% complete, conversion 7/8 complete) Costs transferred in from the Mixing Department Material added during October (added when processing S 38,874 180,936 is 50% complete in the Forming Department) Conversion costs added during October 67,776 195,234 Total departmental costs $482,820 Forming Department costs assigned to: Units completed and transferred to the Stamping $482,820 Department (130,000 units at $3.71400 each) Work in process inventory, October 31 (6,500 units, conversion 2/5 complete) Total departmental costs assigned $482,820 Consists of cost transferred in, $15,624; materials cost, S6,324; and conversion costs, $16,926. After mulling over the data above, Tavia\'s president commented, \"l can\'t understand what\'s happening here. Despite a concentrated effort at cost reduction, our unit cost actually went up in the Forming Department last month. With that kind of performance, year-end bonuses are out of the question for the people in that department. The company uses the weighted-average method in its process costing Required: 1. Calculate the following by preaparing a report for the Forming Department for October. (Round Cost per equivalent unit answers to 2 decimal places.) Transfer Materials Conversion Total In Equivalent units of production Cost per equivalent unit Cost of ending work in process inventory Cost of units completed and transferred out

Solution

UNITS TO ACCOUNT FOR: Beginning Work in Process units 9,300.00 Add: Units Started in Process 127,200.00 Total Units to account for: 136,500.00 UNITS TO BE ACCOUNTED FOR: Units started and completed 130,000.00 Ending Work in Process 6,500.00 Total Units to be accounted for: 136,500.00 Equivalent Units: Transferred in Cost Material Cost Conversion Cost % Completion Units % Completion Units % Completion Units Units started annd completed 100% 130,000.00 100% 130,000.00 100% 130,000.00 Ending Work in Process 100% 6,500.00 100% 6,500.00 40% 2,600.00 Total Equivalent units 136,500.00 136,500.00 132,600.00 TOTAL COST TO ACCOUNT FOR: Transferred-in Material Conversion Beginning work in Process 15,624 6324 16,926 Cost Added during May 180,936 67,776 195,234 Total Cost to account for: 196,560 74,100 212,160 Total Cost to account for: 482,820 COST PER EQUIVALENT UNIT: Transferred-in Material Conversion Cost added during the period 196,560 74,100 212,160 Equivalent Units 136,500.00 136,500.00 132,600.00 Cost per Equivalent unit 1.44 0.54 1.60 TOTAL COST ACCOUNTED FOR: Completed and transferred out (130000 units) Equivalent unit Total Cost Transferred-in cost 130,000.00 1.44 187200 Material cost 130,000.00 0.54 70200 Conversion Cost 130,000.00 1.6 208000 Total cost of Ending Work in process: 465,400 Ending Work in Process (6500 units) Equivalent unit Total Cost Transferred-in cost 6,500.00 1.44 9360 Material cost 6,500.00 0.54 3510 Conversion Cost 2,600.00 1.6 4160 Total cost of Ending Work in process: 17,030 Transferred in Material Conversion Total Equivalent units of production 136500 136500 132600 Cost per equivalent unit 1.44 0.54 1.6 3.58 Cost of Ending Wip 9360 3510 4160 17030 Cost of Units transferred out 187200 70200 208000 465400