Question

The following information is for Douglas Manufacturing Company for the month of May. All materials are...

The following information is for Douglas Manufacturing Company for the month of May. All materials are added at the beginning of the production process.

Beginning Inventory

2,350 units, 40% complete

Direct Materials         $7,200

Conversion                 $1,100

Current Month’s Data

10,120 units started

Direct Materials         $51,612

Conversion                 $53,904

Ending Inventory

1,000 units, 70% complete

d.         Compute the cost of ending work in process being sure to show how much of the cost is materials and how much of the cost is conversion.

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Answer #1

Solution:

It is assumed that company is using FIFO method of process costing.

Douglas Manufacturing Company
Computation of Equivalent unit (FIFO)
Particulars Physical units Material Conversion
Units to be accounted for:
Beginning WIP Inventory 2350
Units started this period 10120
Total unit to be accounted for 12470
Units Accounted for:
Units completed and transferred out
From beginning inventory
Material - 0%
Conversion - 60%		 2350 0 1410
Started and completed currently 9120 9120 9120
Units in ending WIP
Material - 100%
Conversion - 70%		 1000 1000 700
Total units accounted for 12470 10120 11230
Douglas Manufacturing Company
Computation of Cost per Equivalent unit
Particulars Total cost Material Conversion
Current period cost $105,516.00 $51,612.00 $53,904.00
Equivalent units 10120 11230
Cost per equivalent unit $5.10 $4.80

Cost of ending WIP = Equivalant unit of material in ending WIP * Cost per equivalant unit of material + Equivalant unit of conversion in ending WIP * Cost per equivalant unit of conversion

= 1000*$5.10 + 700*$4.80 = $8,460

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