Week 13 - Accy211: Management Accounting II Autumn Session...

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Page 1 of 6 Accy211: Management Accounting II Autumn Session 2009 Tutorial solutions: Week 13 CHAPTER 17 & 18 Questions Q17-16 Q17-30 Q17-31 Q17-32 Q18-21 17-16: Equivalent units, zero beginning inventory. 1. Direct materials cost per unit ($750,000 ÷ 10,000) $ 75.00 Conversion cost per unit ($798,000 ÷ 10,000) 79.80 Assembly Department cost per unit $154.80 2. (Step 2) (Step 1) Equivalent Units Physical Direct Conversion Flow of Production Units Materials Costs Work in process, beginning (given) 0 Started during current period (given) 10,000 To account for 10,000 Completed and transferred out during current period 9,000 9,000 9,000 Work in process, ending * (given) 1,000 1,000 × 100%; 1,000 × 50% 1,000 500 Accounted for 10,000 Work done in current period 10,000 9,500 Total Production Costs Direct Materials Conversion Costs ( Step 3 ) Costs added during February $1,548,000 $750,000 $798,000 Divide by equivalent units of work done in current period ÷ 10,000 ÷ 9,500 Cost per equivalent unit $ 75 $ 84 * Degree of completion in this department: direct materials, 100%; conversion costs, 50%. 3. The difference in the Assembly Department cost per unit calculated in requirements 1 and 2 arises because the costs incurred in January and February are the same but fewer equivalent units of work are done in February relative to January. In January, all 10,000 units introduced are fully completed resulting in 10,000 equivalent units of work done with respect to direct materials and conversion costs. In February, of the 10,000 units introduced, 10,000 equivalent units of work is done with respect to direct materials but only 9,500 equivalent units of work is done with respect to conversion costs. The Assembly Department cost per unit is, therefore, higher.
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17-30: Weighted-average method. (Step 1) (Step 2) Equivalent Units Physical Direct Conversion Flow of Production Units Materials Costs Work in process, beginning (given) 5,000 Started during current period (given) 20,000 To account for 25,000 Completed and transferred out during current period 22,500 22,500 22,500 Work in process, ending* (given) 2,500 2,500 × 100%; 2,500 × 70% 2,500 1,750 Accounted for 25,000 Work done to date 25,000 24,250 Total Production Costs Direct Materials Conversion Costs (Step 3 ) Work in process, beginning (given) $1,652,750 $1,250,000 $ 402,750 Costs added in current period (given) 6,837,500 4,500,000 2,337,500 Total costs to account for $8,490,250 $5,750,000 $2,740,250 ( Step 4 ) Costs incurred to date $5,750,000 $2,740,250 Divide by equivalent units of work done to date ÷ 25,000 ÷ 24,250 Cost per equivalent unit of work done to date $ 230 $ 113 ( Step 5 ) Assignment of costs: Completed and transferred out (22,500 units) $7,717,500 (22,500* × $230) + (22,500 * × $113) Work in process, ending (2,500 units) 772,750 (2,500 × $230) + (1,750 × $113) Total costs accounted for
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Week 13 - Accy211: Management Accounting II Autumn Session...

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