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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cost of units completed and in process

a. Based on the data in Exercise 20-11, determine the following:

  1. 1. Cost of beginning work in process inventory completed this period
  2. 2. Cost of units transferred to finished goods during the period
  3. 3. Cost of ending work in process inventory
  4. 4. Cost per unit of the completed beginning work in process inventory, rounded to the nearest cent

b. Did the production costs change from the preceding period? Explain.

c. Assuming that the direct materials cost per unit did not change from the preceding period, did the conversion costs per equivalent unit increase, decrease, or remain the same for the current period?

To determine

(a-1)

Process costs

It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

Production cost report

A production cost report is a comprehensive report prepared for each department separately at the end of a particular period, which represents the physical flow and cost flow of product for the concerned department.

To Determine: The costs of beginning work in process inventory balance.

Explanation

Calculate costs of beginning work in process inventory balance as shown below:

Particulars Units (A) Per unit (B) Amount (A × B)
Beginning work in process balance $17,440
Add: Conversion costs incurred during the period 1,040 $4...

(a-2)

To determine
The cost of units transferred to finished goods.

(a-3)

To determine
The cost of ending work in process inventory.

(a-4)

To determine
The cost per equivalent unit for direct materials and conversion costs including beginning inventory.

(b)

To determine

To Identify: Whether the production costs changes from the preceding year, and explain.

(c)

To determine

To Identify: If the direct material cost per unit did not change from the preceding period, whether the conversion equivalent cost per unit would be increase, or decrease or remain constant during the current period.

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