Question

McElroy Inc, produces is single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow: The assembly department has no beginning work-in-process inventory. During the month, it started 30,000 cell phones, but only 26,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 4,000 cell phones, but only 50% of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.
1. Compute the equivalent units and cost per equivalent unit for March in the assembly department.
2. Compute the costs of units completed and transferred to the testing department.
3. Compute the costs of the ending work-in-process.

Answer 1

Question Completion:

The manufacturing costs in the assembly department during March follow:

Direct materials  $187,500

Conversion costs 163,800

Total costs         $351,300

Answer:

McElroy Inc.

                                                 Materials       Conversion

1. Equivalent units                     30,000           28,000

Cost per equivalent units          $6.25              $5.85

2. Costs of units completed and transferred to the testing department:

Cost attributed to:              Materials       Conversion        Total

Units transferred out        $162,500         $152,100      $314,600

3. Ending Work in Process  25,000              11,700          36,700

Explanation:

a) Data and Calculations:

                                        Units       Materials       Conversion

Started during March    30,000      

Completed                    26,000       26,000           26,000

Ending Work in Process 4,000          4,000             2,000 (50%)

Equivalent units                                30,000           28,000

Cost of production:                      Materials       Conversion   Total

Incurred during March                 $187,500        $163,800  $351,300

Cost per equivalent unit:             Materials       Conversion

Total cost of production              $187,500         $163,800

Equivalent units                              30,000             28,000

Cost per equivalent unit              $6.25              $5.85

Cost attributed to:           Units       Materials       Conversion   Total

Units transferred out     26,000    $162,500         $152,100   $314,600

Ending Work in Process  4,000        25,000              11,700       36,700

Total costs                                      $187,500         $163,800   $351,300