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Missouri Corporation shows the following information concerning the work in process at its plant: Beginning inventory was

s partially complete (materials are 100 percent complete; conversion costs are 60 percent complete). Started this month, 180,000 units. Transferred out, 150,000 units. Ending inventory, 100,000 units (materials are 100 percent complete; conversion costs are 15 percent complete). Required: (a) Compute the equivalent units for materials using the weighted-average method. Equivalent units
250,000

(b) Compute the equivalent units for conversion costs using the weighted-average method. Equivalent units
165,000

Explanation:

Materials Units transferred out Equivalent units in ending inventory: Materials: 100% 100,000 units Conversion costs: 15% 100,000 units Total equivalent units for all work done to date 150,000

Conversion Costs 150,000

100,000

15,000

250,000

165,000

Missouri Corporation shows the following information concerning the work in process at its plant: Beginning inventory was partially complete (materials are 100 percent complete; conversion costs are 60 percent complete). Started this month, 180,000 units. Transferred out, 150,000 units. Ending inventory, 100,000 units (materials are 100 percent complete; conversion costs are 15 percent complete). Required: (a) Compute the equivalent units for materials using FIFO.

Equivalent units

180,000

(b) Compute the equivalent units for conversion costs using FIFO. Equivalent units
123,000

Explanation:

Materials To complete beginning inventory: Materials: b 0% a 70,000 units Conversio n costs: c 40% 70,000 units Started and completed during the period Units still in ending inventory: Materials: 100% 100,000 units Conversio n costs: 15% 100,000 units

Conversion Costs

0 EU

28,000 EU

80,000 EU

80,000 EU

100,000 EU

15,000 EU

180,000 EU

123,000 EU

70,000 units in beginning inventory = 150,000 units transferred out + 100,000 units in ending inventory 180,000 units started this period. b 0% = 100% 100% already done at the beginning of the period. c 40% = 100% 60% already done at the beginning of the period. d 80,000 units started and completed = 150,000 units transferred out less 70,000 units from beginning inventory.

Aaron Company has a process costing system. All materials are introduced when conversion costs reach 50 percent. The following information is available for physical units during March.

Work in process, March 1 (60% complete as to conversion costs) Units started in March Units transferred to Finishing Department in March Work in process, March 31 (40% complete as to conversion costs)

150,000 600,000 630,000 120,000

Requirement 1: Compute the equivalent units for materials costs and for conversion costs using the weighted-average method. Equivalent units Materials Conversion costs
630,000

678,000

Requirement 2: Compute the equivalent units for materials costs and for conversion costs using the FIFO method. Equivalent units Materials Conversion costs
480,000

588,000

Requirement 3: The company president has been under considerable pressure to increase income. He tells the controller to change the estimated completion for ending work in process to 60 percent (from 40 percent). (a) What effect will this change have on the unit costs of units transferred to finished goods in March? The change will reduce the unit cost for the units transferred to finished goods. (b) Would this be ethical? No (c) Is this likely to be a successful strategy for affecting income over a long period of time? No

Explanation:

1: Weighted-average method: Conversion Costs 630,000

Materials Units transferred out Equivalent units in ending inventory: Materials: 0% 120,000 units Conversion 630,000

0 48,000

costs: 40% 120,000 units Total equivalent units for all work done to date

630,000

678,000

2: First-in, First-out (FIFO) method: Materials To complete beginning inventory: Materials: a 0% 150,000 units Conversio n costs: b 40% 150,000 units Started and completed during the c period Units still in ending inventory: Materials: 0% 120,000 units Conversio n costs: 40% 120,000 units Conversion Costs

0 EU

60,000 EU

480,000 EU

480,000 EU

0 EU

48,000 EU

480,000 EU

588,000 EU

a b

0% = 100% 100% already done at the beginning of the period (conversion was 60% complete). 40% = 100% 60% already done at the beginning of the period. c 480,000 units started and completed = 630,000 units transferred out less 150,000 units from beginning inventory. 3: (a) The change will reduce the unit cost for the units transferred to finished goods. (b) It is not ethical; there is no reason to believe the change reflects anything other than a desire for reporting better results.

(c) It is unlikely to be successful for long. An accounting system keeps track of actual costs. If a manager postpones reporting them this period, they will be reported next period or shortly thereafter. The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs

976 272 11,440 6,644

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory Current period units started Ending inventory

600 units (60% complete as to materials, 53% complete as to conversion) 4,000 units 1,200 units (40% complete as to materials, 20% complete as to conversion)

Required: Compute the cost per equivalent unit for direct materials and conversion costs using the weightedaverage method. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Cost per EU Materials Conversion costs $ $
3.20 1.90

Explanation:

Physical Units

Equivalent Units Conversion Costs

Materials Flow of units: Units to be accounted for: Beginning WIP inventory Units started this period

600 4,000

Total units to account for

4,600

Units accounted for: Completed and transferred a out Units in ending inventory: Materials (1,200 40%) Conversi on costs (1,200 20%) Total units accounted for

3,400

3,400

3,400

1,200 480 240

4,600

3,880

3,640

3,400 units transferred out = 4,600 units to account for 1,200 units in ending WIP inventory. Direct Materials Conversion Costs

Total Flow of costs: Costs to be accounte d for: Costs in beginnin g WIP inventory Curre nt period costs Tot al costs to be accounte d for

1,248

976

272

18,084

11,440

6,644

19,332

12,416

6,916

Cost per

equivale nt unit Materi als ($12,416 3,880 units)

3.20

Conv ersion costs ($6,916 3,640 units)

1.90

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award:

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The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inventories. The accounting records show the following information for a particular day: Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs

976 272 11,440 6,644

Quantity information is obtained from the manufacturing records and includes the following: Beginning inventory Current period units started Ending inventory 600 units (60% complete as to materials, 53% complete as to conversion) 4,000 units 1,200 units (40% complete as to materials, 20% complete as to conversion)

Required: Compute the cost of goods transferred out and the ending inventory using the weighted-average method.(Round unit costs for materials and conversion to 2 decimal places and the final answers

to the nearest dollar amount. Omit the "$" sign in your response.)

Cost of goods transferred out Costs in ending inventory

$ $

17,340

1,992

Explanation:

Physical Units

Equivalent Units Conversion Costs

Materials Flow of units: Units to be accounted for: Beginning WIP inventory Units started this period Total units to account for

600 4,000

4,600

Units accounted for: Completed and transferred a out Units in ending inventory: Materials (1,200 40%) Conversi on costs (1,200 20%) Total units accounted for

3,400

3,400

3,400

1,200 480 240

4,600

3,880

3,640

3,400 units transferred out = 4,600 units to account for 1,200 units in ending WIP inventory. Total Direct Materials Conversion Costs

Flow of costs:

Costs to be accounte d for: Costs in beginnin g WIP inventory Curre nt period costs Tot al costs to be accounte d for

1,248

976

272

18,084

11,440

6,644

19,332

12,416

6,916

Cost per equivale nt unit Materi als ($12,416 3,880 units)

3.20

Conv ersion costs ($6,916 3,640 units)

1.90

Costs accounte d for: Costs assigned to units transferr ed out Cost of ending WIP inventory Tot al costs accounte d for

17,340

10,880
c

6,460
d

1,992

1,536

456

19,332

12,416

6,916

Costs transferred out total $17,340, and costs in ending inventory total $1,992. a $10,880 = 3,400 EU $3.20 per EU. b $6,460 = 3,400 EU $1.90 per EU. c $1,536 = 480 EU $3.20 per EU. d $456 = 240 EU $1.90 per EU. The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs

976 272 11,440 6,644

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory Current period units started Ending inventory

600 units (60% complete as to materials, 53% complete as to conversion) 4,000 units 1,200 units (40% complete as to materials, 20% complete as to conversion)

Required: Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.(Round your answers to 2 decimal places. Omit the "$" sign in your response.) Cost per EU Direct materials Conversion costs $ $
3.25 2.00

Explanation:

Physical Units

Equivalent Units Conversion Costs

Materials Flow of units: Units to be accounted for: Beginnin g WIP inventory Units

600 4,000

started this period Total units to account for

4,600

Units accounted for: Complet ed and transferred a out From beginning WIP inventory Ma terials (600 (1 60%)) Co nversion (600 (1 53%)) Starte d and completed currently (2,800 100%) Units in ending inventory Materi als (1,200 40%) Conv ersion costs (1,200 20%) Total units accounted for

3,400

240

282

2,800

2,800

1,200

480

240

4,600

3,520

3,322

3,400 units transferred out = 4,600 units to account for 1,200 units in ending WIP inventory. Direct Materials Conversion Costs

Total Flow of costs: Costs to

be accounte d for: Costs in beginning WIP inventory Curre nt period costs To tal costs to be accounte d for

1,248

976

272

18,084

11,440

6,644

19,332

12,416

6,916

Cost per equivalent unit Mater ials ($11,440 3,520 units)

3.25

Conv ersion costs ($6,644 3,322 units)

2.00

The Matsui Lubricants plant uses the FIFO method to account for its work-in-process inventories. The accounting records show the following information for a particular day:

Beginning WIP inventory Direct materials Conversion costs Current period costs Direct materials Conversion costs

976 272 11,440 6,644

Quantity information is obtained from the manufacturing records and includes the following:

Beginning inventory Current period units started

600 units (60% complete as to materials, 53% complete as to conversion) 4,000 units

Ending inventory

1,200 units (40% complete as to materials, 20% complete as to conversion)

Required: Compute the cost of goods transferred out and the ending inventory using the FIFO method. (Round unit costs for materials and conversion to 2 decimal places and the final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Cost of goods transferred out Cost of ending inventory

$ $

17,292

2,040

Explanation:

Physical Units

Equivalent Units Conversion Costs

Materials Flow of units: Units to be accounted for: Beginnin g WIP inventory Units started this period Total units to account for

600

4,000

4,600

Units accounted for: Complet ed and transferred a out From beginning WIP inventory Ma terials (600 (1 60%)) Co nversion (600 (1 53%))

3,400

240

282

Starte d and completed currently (2,800 100%) Units in ending inventory Materi als (1,200 40%) Conv ersion costs (1,200 20%) Total units accounted for

2,800

2,800

1,200

480

240

4,600

3,520

3,322

3,400 units transferred out = 4,600 units to account for 1,200 units in ending WIP inventory. Direct Materials

Total Flow of costs: Costs to be accounted for: Costs in beginning WIP inventory Current period costs Total costs to be accounted for

1,248 18,084

976 11,440

19,332

12,416

Cost per equivalent unit Materials ($11,440 3,520 units)

3.25

Conversion costs ($6,644 3,322 units)

Costs accounted for: Costs assigned to units transferred out: Costs from beginning WIP inventory Current costs added to complete beginning WIP inventory

1,248 1,344

976

Materials ($3.25 240) Conversion costs ($2.00 282) Current costs of units started and completed: Materials ($3.25 2,800) Conversion costs ($2.00 2,800) Total costs transferred out Cost of ending WIP inventory Materials ($3.25 480) Conversion costs ($2.00 240) Total costs accounted for $

780

14,700 9,100

17,292 2,040

10,856

1,560

19,332

12,416

Ending inventory is slightly higher under the FIFO method because the unit costs are higher under FIFO.