Question

part a The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Duerr Company follows:

Beginning raw materials inventory	$	16,000
Ending raw materials inventory		19,000
Raw material purchases		93,000
Beginning work in process inventory		28,000
Ending work in process inventory		38,000
Direct labor		118,000
Total factory overhead		93,000
Beginning finished goods inventory		68,000
Ending finished goods inventory		48,000

The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:

part b Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 81,000 units, 80% complete as to materials and 20% complete as to conversion.
Units started and completed: 252,000.
Units completed and transferred out: 333,000.
Ending Inventory: 30,500 units, 30% complete as to materials and 15% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $38,200.
Costs in beginning Work in Process - Conversion: $80,700.
Costs incurred in October - Direct Materials: $710,130.
Costs incurred in October - Conversion: $920,300.

Calculate the cost per equivalent unit of materials.

part c

Richards Corporation uses the FIFO method of process costing. The following information is available for October in its Fabricating Department:

Units:
Beginning Inventory: 95,000 units, 70% complete as to materials and 20% complete as to conversion.
Units started and completed: 265,000.
Units completed and transferred out: 360,000.
Ending Inventory: 37,500 units, 30% complete as to materials and 10% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $52,200.
Costs in beginning Work in Process - Conversion: $94,700.
Costs incurred in October - Direct Materials: $802,800.
Costs incurred in October - Conversion: $1,091,050.

Calculate the cost per equivalent unit of conversion.

Answer 1

a.

Direct materials
Beginning inventory	16000
Add: purchases	93000
Less: ending inventory	(19000)
Cost of raw materials used	90000
Direct labor	118000
Total factory overhead	93000
Total manufacturing cost	301000
Beginning WIP inventory	28000
Less:Ending WIP inventory	(38000)
Cost of goods manufactured	291000
Beginning finished goods inventory	68000
Less:Ending finished goods inventory	(48000)
Cost of goods sold	311000

b.

Equivalent units of material:

Completed and transferred = 333000

Ending inventory = 30500 *30% = 9150

Equivalent units of material = 342150 units

Cost per unit = (38200 + 710130) / 342150 = $2.187

c.

Equivalent units of conversion = (100 - 20%)*95000 + 360000 + (37500 * 10%)

= 76000 + 360000 + 3750 = 439750 units

Cost per unit = (94700 + 1091050) / 439750 = $2.70