Question

Thakin Industries Inc. manufactures dorm furniture in separate processes. In each process, materials are entered at the beginning, and conversion costs are incurred uniformly. Production and cost data for the first process in making a product are as follows.

		Cutting Department
Production Data—July		T12-Tables
Work in process units, July 1		0
Units started into production		22,200
Work in process units, July 31		3,330
Work in process percent complete		60
Cost Data—July
Work in process, July 1		$0
Materials		421,800
Labor		260,184
Overhead		115,440
Total		$797,424

Compute the physical units of production.

		T12 Tables
Units to be accounted for

Compute equivalent units of production for materials and for conversion costs.

		Materials		Conversion Costs
T12 Tables

Determine the unit costs of production.

		Materials		Conversion Costs		Total Costs
Unit costs-T12 Tables		$		$		$

Answer 1

Solution:

Thakin Industries Inc.
Production Cost report - Cutting Department
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	0
Started into Production	22200
Total units to account for	22200
Units accounted for:
Unit completed & Transferred out	18870	18870	18870
Units in ending inventory:	3330
Material (100%)		3330
Conversion (60%)			1998
Equivalent units of production	22200	22200	20868

Thakin Industries Inc. Computation of Cost per equivalent unit - Cutting department
Particulars	Material	Conversion	Total
Opening WIP	$0	$0	$0
Cost Added during Period	$421,800	$375,624	$797,424
Total cost to be accounted for	$421,800	$375,624	$797,424
Equivalent units of production	22200	20868
Cost per Equivalent unit	$19.00	$18.00