Question

Lisburn Plastic Products Company makes a plastic toy using two departments: parts and assembly. The following data pertain to the parts department’s transactions in 2018:

The beginning balance in the Work in Process Inventory account was $10,000. This inventory consisted of parts for 2,000 toys. The beginning balances in the Raw Materials Inventory, Production Supplies, and Cash accounts were $97,500, $1,000, and $200,000, respectively.

Direct materials costing $90,000 were issued to the parts department. The materials were sufficient to make 6,000 additional toys.

Direct labor cost was $80,000, and indirect labor costs were $6,000. All labor costs were paid in cash.

The predetermined overhead rate was $0.30 per direct labor dollar.

Actual overhead costs other than production supplies and indirect labor for the year were $18,250, which was paid in cash.

The parts department completed work for 6,400 toys. The remaining toy parts were 25 percent complete. The completed parts were transferred to the assembly department.

All of the production supplies had been used by the end of 2018.

Over- or underapplied overhead was closed to the Cost of Goods Sold account.

Required

Determine the number of equivalent units of production.

Determine the product cost per equivalent unit.

Calculate the total cost allocated between the ending work in process inventory and parts transferred to the assembly department.

Record the transactions in a partial set of T-accounts.

Answer 1

1,2&3)
	Phy units	Material	conversion	total
O WIP (on weighted average production)	2000	2000	2000
Started and completed units	4400	4400	4400
Transferred to assembly	6400
C WIP	1600	1600	400 (25%)
Equivalent units		8000	6800
Cost incurred		90000+10000=100000	104000
Cost per eq. unit		12.5	15.29
cost of transferred to assembly		80000	97882	177882
cost of C WIP		20000	6118	26118

4) t-Accounts:
RM account:
OB	$97,500	WIP	90000
		CB	7500
WIP account:
OB	10000	FG	177882
RM	90000	CB	26118
DL	80000
M O/H	24000
total	204000	total	204000
Manufacturing Overhead account:
Ind lab	6000	WIP	24000
other expenses	18250	COGS	250