Question

# Company manufactures soccer balls through a two-step process.   First, the raw materials (polyurethane, rubber, polyester, and...

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

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.

1. The units in the BB WIP, Started and Completed, and EB WIP
2. Calculate the equivalent units for direct materials and conversion costs.
3. Calculate the cost per equivalent unit for direct materials and conversion costs.
4. Calculate the cost of goods completed and transferred out (to the Stitching Department).
5. Calculate the cost of the ending balance of Work in Process.

 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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