Equivalent units and cost calculations in process costing
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Practice Calculations
Problem 14-A2.
The completed units are counted whole. The incomplete units are pro-rated on the basis of how complete they are. The equivalent units would be 18,000 + (.5)(2000) = 19,000. The unit cost would be $95,000 / 19,000 = $5 per unit.
The cost of the units completed and sent to testing would be (18,000)(5) = $90,000. The cost of the ending work in progress is (2000)(.5)(5) = $5,000. This reflects the total units in progress, the degree of completion and the full production cost per unit.
Problem 14-A3.
The first step is to calculate the unit costs. There were 10,000 in the beginning inventory, 80,000 units started and 70,000 completed. The cost of goods sold for the work finished includes 10,000 units already in progress and 60,000 full units. The unit cost for direct materials is easy to calculate, since direct materials are added at the beginning of the process. Thus, 80,000 units were started in the month:
$852,000 / 80,000 = $10.65 per unit.
For conversion cost per unit, we can figure this out from the works in progress inventory:
$37,500 = (10,000)(.25)x; therefore $37,500 / 2500x; x = $15 per unit.
So for the 70,000 units completed in July: (70,000)(15 + 10.65) = $1,795,500
2. The ending works in progress is 20,000. The total cost should be (20,000)(25.65) = 513,000
Note: These figures represent the total cost of the goods, not the total cost in July of the goods. The question is worded a little bit funny so I wasn't sure which one it was intended to be.
Problem 14-21.
Problem 14-21
1
2
3
4
DM Inv, 2010
8
8
5
2
Purchased
5
9
10
8
Used
7
11
7
3
DM Inv, 2011
6
6
8
7
Problem 14-22-1.
Goods Completed
72,000
WIP Inventory
72,000
Goods Completed
56,000
WIP Inventory
56,000
2. The WIP inventory at the end of the month would reflect the following:
Beginning WIP 12,000 + 50 + 25 + 55 = 142
Less completed orders (72,000) + (56,000) = 128
So Ending WIP inventory = 142 -- 128 = 14
3.
Accounts Receivable
101,000
Sales
101,000
Cost of Goods Sold
72,000
Finished Inventory
72,000
Problem 14-25.
1.a) September 30 would be jobs 53,61,62,71,81 so 200 + 115 + 180 + 118 + 106 = $719
October 31 would be jobs 71,81, so 118 + 106 = $224 plus the construction cost added in the month for these houses: 50+20+25+36+48 = $719 + $179 = $898
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