Company manufactures soccer balls through a two-step process. First, the raw materials (polyurethane, rubber, polyester, and latex) are molded together in the Molding Department and then are transferred to the Stitching Department to complete the manufacturing process. Company uses the First-In-First-Out method of Process Costing. Data relating to manufacturing activity in the Molding Department during the month of February is shown below:
Beginning Balance, Work in Process, (300 units, 60% complete) $3,000
Direct Materials (4,200 units started) 20,160
Direct Labor 8,400
Factory Overhead 16,495
Ending Balance, Work in Process (700 units, 30% complete) ?
In the Molding Department, materials are added at the beginning of the process and conversion costs are applied on a uniform basis.
Instructions
With respect to activity in the Molding Department for the month of February, using the “4 T’s” calculate the following items. Show your work.
| Equivalent units | |||
| Physical units | Material | Conversion | |
| Beginning WIP | 300 | 0 | 120 (300*40%) |
| Started and completed | 3,500 | 3,500 | 3,500 |
| Ending WIP | 700 | 700 | 210 (700*30%) |
| Total | 4,200 | 3,830 |
| Direct material | Conversion | Total | |
| Cost added during the month | $20,160 | $24,895 | |
| Equivalent units | 4,200 | 3,830 | |
| Cost per equivalent unit | $4.8 | $6.5 | $11.3 |
| Cost of goods completed and transferred out: | ||
| Beginning WIP: | ||
| Beginning balance | $3,000 | |
| Cost added during the month (120*$6.5) | 780 | |
| Total | $3,780 | |
| Started and completed (3,500*$11.3) | 39,550 | |
| Total cost of goods completed and transferred out | $43,330 |
| Cost of ending balance of WIP: | |
| Direct material (700*$4.8) | $3,360 |
| Conversion costs (210*$6.5) | 1.365 |
| Total cost of ending balance of WIP | $4,725 |
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