CHAPTER 20PROCESS COST SYSTEMS Study 0 Progress0 Previous 0

CHAPTER 20-PROCESS COST SYSTEMS Study 0 Progress0 Previous 0 Page 4 of 8?0 Not O? Submit Quiz Department Z had no work in process at the beginning of the period, 18,000 units were started during the period, 2,000 units were 30% completed at the end of the period and the folowing manufact ng oats were debited to the departmental work in process account during the period (assuming the company uses FIFOr Direct materials Direct labor Factory overhead 80 100 102.300 37,140 Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the units completed during the period? a. $134,400 b.$213.310 d $8o,100 Study 0Progress CHAPTER 20- PROCESS COST SYSTEMS °Previous 0 Page 5 of 8 mo Next O 0 Step 3 in preparing the cost of production report is Submit Quiz a allocate costs to units transferred out and partially completed units. b. determine the cost per equivalent unit. c. determine the units to be assigned costs. d. compute equivalent units of production. CHAPTER 20- PROCESS COST SYSTEMS Study 0 Progress O Previous 0 Page 3 of 8 ill 0 Next 0 0 The following production data were taken from the records of the Finishing Department for July: mentory in process, July 1,40% completed Submit Quiz 4,000 units 37,500 units 3,500 units Transferred to finished goods during July Ending work in process during July, 20% completed Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used t materials are placed in process at the beginning of production. to cost inventories. Assume that all direc a. 41,000 units b 36,600 units c. 37,000 units d. 39,400 units

Solution

Ans1. C. $205,600

The total cost of finished goods will be calculated as follows

For materials all the material is introduced in the beginning so the units are always complete as rgards material. So Total cost of material is $80,100 and it is for 18000 units, then the cost for 16000 completed units will be

= 80100 * 16000 / 18000 = 71,200

For labor and overhead out of 18000 units the completed units are 16000 full + 2000 @30% completion

= 16000 + 600 = 16600 Units and the total cost is 102300 + 37140 = $139,440

So cost of 16000 completed units will be = 139440 * 16000 / 16600 = $134400

So total cost of 16000 Units = Materials + Conversion cost = 71200 + 134400 = $205,600.

Ans. 2. A. 41000 Units

Total units finished during the period are 37500 + WIP is 3500 = 41000.

Another way could have been to find out these units from beginning inventory if the number of new units introduced would have been given.