Question

The following partially completed process cost summary describes the July production activities of the Molding department at Ashad Company. Its production output is sent to the next department. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion.Equivalent Units of Production Direct Materials ConversionUnits transferred out 39,500 EUP 39,500 EUPUnits of ending work in process 4,000 EUP 2,400 EUPEquivalent units of production 43,500 EUP 41,900 EUPCosts per EUP Direct Materials ConversionCosts of beginning work in process$ 37,650 $ 4,620 Costs incurred this period 480,000 271,920 Total costs $ 517,650 $ 276,540 Units in beginning work in process (all completed during July) 3,500Units started this period 40,000Units completed and transferred out 39,500Units in ending work in process 4,000Prepare its process cost summary using the FIFO method.

Answer 1

Answer:

1. Total costs to account for $ 794,190

2.Total units to account for 43,500

Total units accounted for 43,500

3.Total Equivalent units of production

Material 40,000

Conversion 41,200

4.Cost per EUP

Material $ 12

Conversion $ 6.6

5. COST ASSIGNMENT AND RECONCILIATION

Total costs accounted for $794,190

Explanation:

Preparation of its process cost summary using the FIFO method.

1. Costs Charged to Production:

Costs of beginning work in process:

Direct materials $ 37,650

Conversion $ 4,620

$ 42,270

Costs incurred this period:

Direct materials $ 480,000

Conversion $ 271,920

$ 751,920

Total costs to account for $ 794,190

(751,920+42,270)

2 . UNITS COST INFORMATION

Units to ACCOUNT FOR

Beginning work in process 3,500

Units started this period 40,000

Total units to account for 43,500

Units ACCOUNTED FOR

Completed & transferred out 39,500

Ending work in process 4,000

Total units accounted for 43,500

3. DIRECT MATERIAL

Equivalent units of production:

Units to complete beginning WIP:

Direct materials 3,500*0% 0

Units started and completed

Direct materials (39,500-3,500) 36,000 Units of ending work in process:

Direct materials 4,000

Total Equivalent units of production 40,000

(36,000+4,000)

CONVERSION

Equivalent units of production:

Units to complete beginning WIP:

Conversion 3,500*80% 2,800

Units started and completed

Conversion (39,500-3,500) 36,000

Units of ending work in process:

Conversion 2,400

Total Equivalent units of production 41,200

(2,800+36,000+2,400)

4. Direct Materials Conversion

COST PER EUP

Costs incurred this period

$ 480 000 $ 271,920

÷EUP (from prior page)

40,000 41,200

=Cost per EUP $ 12 $ 6.6

5. COST ASSIGNMENT AND RECONCILIATION

Costs transferred out:

Cost of beginning work in process $ 42,270

Cost to complete beginning work in process:

Direct materials (0 EUP x $12 per EUP) $0

Conversion (2,800 EUP x $6.60 per EUP) $ 18,480

Total $18,480

Costs of units started and completed this period:

Direct materials (36,000 EUP x $12 per EUP) $ 432,000

Conversion (36,000 EUP x $6.60 per EUP) $ 237,600 $ Total $669,600

Total cost of work finished this period $ 688,080

( 669,600+ 18,480)

Costs of ending work in process:

Direct materials (4,000 EUP x $12 per EUP) $ 48,000

Conversion (2,400 EUP x $6.60 per EUP) $ 15,840 $ Total $63,840

Total costs accounted for $794,190

(42,270$ 688,080+63,840)