Question

Coca-Cola uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $137,100 in conversion costs were charged to the department. The beginning work in process inventory was $93,000 on July 1, comprised of $80,000 of materials costs and $13,000 of conversion costs. (20 pts)
Other data for the month of July are as follows:

Beginning work in process inventory, 7/1 25,000 units (40% complete)

Units completed and transferred out 70,000 units

Ending work in process inventory, 7/31 30,000 units (30% complete)

Instructions

Answer the following questions and show computations to support your answers.

1. How many physical units have to be accounted for in July?

2. What are the equivalent units of production for materials and for conversion costs for the month of July?

3. What is the total cost assigned to the 70,000 units that were transferred out of the process in July?

4. What is the total cost of the July 31 inventory?

Answer 1

Answer:

Explanation:

Opening units  25000

Started              75000

                          100000

Transffered          70000

Closing                  30000

we will draw the table using the weighted average method through that we will be able to identify equivellent production units and cost per unit with respect to material and conversion cost.

cost         opening      current     Total      complete   Wip   equivalent   Cost  

head                                              cost                                        Units       p.unit

Material 80,000   190,000    270,000   70,000   30,000  100,000    2.70  

C.cost   13,000   137,100     150,100   70,000    12,000    82,000      1.83  

                                                                                                                    4.53

Complete  70,000   4.53   317,134  

   

Closing Wip    

   

Material  30,000   2.70   81,000  

Labour  12,000   1.83   21,966  

                           102,966  

   

Total Cost            420,100  

in the table Closing wip units related to Conversion cost represent 40% completion.

opening wip CC units 70% have been completed in the current which are included in complete units i.e  70000 units