question archive Company manufactures car seats in its plant
Company manufactures car seats in its plant
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Company manufactures car seats in its plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The?process-costing system at
Hoffman
Company has a single? direct-cost category? (direct materials) and a single? indirect-cost category? (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the assembly department finishes work on each car? seat, it is immediately transferred to testing. Hoffman Company uses the FIFO method of process costing.
|
Physical Units |
Direct |
Conversion |
|
|
(Car Seats) |
Materials |
Costs |
|
Work in? process, October 1a |
4,000 |
$1,248,000 |
$241,650 |
|
Started during October 2017 |
22,500 |
||
|
Completed during October 2017 |
26,000 |
||
|
Work in? process, October 31b |
500 |
||
|
Total costs added during October 2017 |
$4,635,000 |
$2,575,125 |
aDegree of? completion: direct? materials, ?%; conversion?costs, 45?%.
bDegree of? completion: direct? materials, ?%; conversion?costs, 65?%.
|
Direct |
Conversion |
||
|
Materials |
Costs |
||
|
Costs incurred to date |
$5,883,000 |
$2,816,775 |
|
|
Divide by equivalent units of work done to date |
26,500 |
26,325 |
|
|
Cost per equivalent unit for work done to date |
$222 |
$107 |
|
|
Total |
Direct |
Conversion |
||
|
Production Costs |
Materials |
Costs |
||
|
Completed and transferred out |
$8,554,000 |
$5,772,000 |
$2,782,000 |
|
|
Work in process, ending |
145,775 |
111,000 |
34,775 |
|
|
Total costs accounted for |
$8,699,775 |
$5,883,000 |
$2,816,775 |
|
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Answer:
| Production cost report(FIFO) | |||
| For the Month of | |||
| a) Input/Output reconciliation | |||
| Units be accounted for | Physical units | ||
| Units in beginning WIP Inventory | 4,000 | ||
| Units started/transferred in during the period | 22,500 | ||
| Total units be accounted for | 26,500 | ||
| Transferred out from Beginning Inventory | 4,000 | ||
| Units started and completed during the period | 22,000 | ||
| Normal loss | - | ||
| Abnormal loss | - | ||
| Units in ending WIP Inventory | 500 | ||
| Total units accounted for | 26,500 | ||
| b) Cost of input | |||
| Particulars | Material | Conversion Cost | Total |
| Cost in beginning WIP Inventory | $ 12,48,000.00 | $ 2,41,650.00 | $ 14,89,650.00 |
| Cost incurred during the period | $ 46,35,000.00 | $ 25,75,125.00 | $ 72,10,125.00 |
| Total | $ 58,83,000.00 | $ 28,16,775.00 | $ 86,99,775.00 |
| c) Equivalent units of Production- FIFO | |||
| Material | Conversion Cost | ||
| Units in beginning WIP (A) | 4000 | 4000 | |
| % of completion of beginning WIP in previous period (B) | 100% | 45% | |
| % of beginning WIP completed this period [C=100%-B] | 0% | 55% | |
| Equivalent units in beginning WIP [D=A×C] | - | 2,200 | |
| Units both started and completed in current period (E) | 22,000 | 22000 | |
| Units of ending WIP (F) | 500 | 500 | |
| Percentage of completion of ending WIP (G) | 100% | 65% | |
| Equivalent units in ending WIP (H=F×G) | 500 | 325.0 | |
| Units of Abnormal loss (I) | - | 0 | |
| Percentage of completion of Abnormal loss (J) | 100% | 100% | |
| Equivalent units Abnormal loss (K=I×J) | - | - | |
| Total equivalent units (D+E+H+K) | 22,500 | 24,525 | |
| d) Cost per Equivalent Unit of Production-FIFO | |||
| Material | Conversion Cost | Total | |
| Cost be accounted for (a) | $ 46,35,000.00 | $ 25,75,125.00 | $ 72,10,125.00 |
| Total Equivalent unit be accounted for (b) | 22,500 | 24,525.0 | |
| Cost per Equivalent Unit (a/b) | $ 206.00 | $ 105.00 | $ 311.00 |
| e)Assignment of Cost to the Units transferred out , Units in ending WIP and Abnormal loss-FIFO | |||
| Material | Conversion Cost | Total | |
| Cost in beginning WIP Inventory (A) | $ 12,48,000 | $ 2,41,650 | $ 14,89,650 |
| Transferred in cost for opening WIP (B)= {Cost per Equivalent unit* Equivalent unit} | $ - | $ 2,31,000 | $ 2,31,000 |
| Beginning Inventory ©=A+B | $ 12,48,000 | $ 4,72,650 | $ 17,20,650 |
| Cost assigned to the units transferred out (D)= {Cost per Equivalent unit* Equivalent unit} | $ 45,32,000 | $ 23,10,000 | $ 68,42,000 |
| Cost assigned the to ending WIP Inventory (E)= {Cost per Equivalent unit* Equivalent unit} | $ 1,03,000 | $ 34,125 | $ 1,37,125 |
| Cost assigned to the Abnormal loss unit (F)= {Cost per Equivalent unit* Equivalent unit} | $ - | $ - | $ - |
| Total Cost accounted for | $ 86,99,775 | ||
| Summery of Cost be accounted for and Accounted for as-FIFO | |||
| Cost be accounted for | Accounted for as | ||
| Cost in beginning WIP Inventory | $ 14,89,650 | Cost transferred Out | |
| Beginning | $ 17,20,650 | ||
| Cost Added | Started & Completed | $ 68,42,000 | |
| Material | $ 46,35,000 | Closing WIP | $ 1,37,125 |
| Conversion Cost | $ 25,75,125 | Abnormal loss | $ - |
| Total | $ 86,99,775 | Total | $ 86,99,775 |
