week 2 SUFE Process Costing week 2 Feb 2012

Beginning of the process and materials conversion

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Unformatted text preview: Produces “cool water” in a continuous process; all Produces materials are added at the beginning of the process and materials conversion costs are continuously added conversion Here are the data: Production data: WIP 1st april 2005: Production 1000 gallons (50% completed) ; units started in april 8000 gallons and WIP per 30th april 2005 1600 units (25% completed) WIP WIP 1st april 2005: $ 3000 materials, $1200 conversion costs (total $ 4200) (total Incurred in April 2005: Direct materials: $ 15000 and Incurred conversion costs $10500 (total $ 25500) conversion Prepare a cost of production report for the month of april Prepare 2005 showing details of equivalent units and application of costs assuming that the company uses the Weighted Average Cost method …. Average Davidoff… Step 1) DETERMINE THE NUMBER OF COMPLETED UNITS DETERMINE Total Materials Conversion costs Units $ cost Equivalent Units $ cost Equivalent Units $ cost WIP 1st April April 1000 4200 1000 3000 500 1200 Inputs 8000 25500 8000 15000 7300 10500 Total 9000 29700 9000 18000 7800 11700 Finished Finished Goods Goods 7400 25900 7400 14800 7400 11100 WIP 30th April April 1600 3800 1600 3200 400 600 Total 9000 29700 9000 18000 7800 11700 Unit cost $ 2.00 $ 1.50 In 5 steps; • Step 2) EQUIVALENT UNITS EQUIVALENT • • • • WIP 1st April: 1000 Units commenced: 8000 WIP 30th April: 1600 Thus Completed Units: 1000+8000-1600=7400 units • So at the end of April 7400 units are finished and they contain So 100% of material and there are 1600 units in stock and they also contain 100% materials thus in total we have 9000 units containing 100% materials containing The 7400 units that are finished in April contain 100% The conversion costs but the WIP stock at the end of the month is 25% completed and thus represents 25% of 1600 units or 400 so called equivalent units; In total 7400+400=7800 (equivalent) units • Costs incurred April • Step3) Costs incurred… incurred… Materials Conversion Total Conversion Total costs costs costs Brought Brought Forward Forward 1st April $ 3000 $ 1200 $ 4200 April $ 15000 $ 10500 $ 25500 Total $ 18000 $ 11700 $ 29700 Costs per unit…Step 4) Costs per unit… Costs Total Materials Conversion costs Units $ Units $ Units $ WIP 1st April April 1000 4200 1000 3000 500 1200 Inputs 8000 25500 8000 15000 7300 10500 Total 9000 29700 9000 18000 7800 11700 Finished Finished Goods Goods 7400 25900 7400 14800 7400 11100 WIP 30th April April 1600 3800 3200 600 Total 9000 29700 9000 1800...
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