Q11SE - Horngren'S Financial And Managerial Accounting

Question

The Packaging Department started the month with 600 units in process, received 1,200 units from the Finishing Department, and transferred 1,500 units to Finished Goods. Direct materials are added at the beginning of the process and conversion costs are incurred evenly. The units still in process at the end of the month are 60% complete for conversion costs. Calculate the number of units still in process at the end of the month and the equivalent units of production. The company uses the weighted-average method.

 

Step-by-Step Solution

Answer

The number of units still in process at the end of the month is 300 units, the equivalent unit of production for direct material is 1,800 units, and the conversion cost is 1,680 units.

Step-by-Step Solution: Step 1: Work in Process Inventory

Work in process inventory means the inventory which is partially completed through the manufacturing process at the end of the period. It is shown as a current asset on the balance sheet.

Step 2: The number of units still in process at the end of the month

$$\begin{gathered} \mathbf{Work}\mathbf{ }\mathbf{in}\mathbf{ }\mathbf{process}\mathbf{ }\mathbf{inventory}\mathbf{=}\mathbf{Beginning}\mathbf{ }\mathbf{WIP}\mathbf{+}\mathbf{Received}\mathbf{ }\mathbf{from}\mathbf{ }\mathbf{finishing}\mathbf{ }\mathbf{department}\mathbf{-}\mathbf{Transferred}\mathbf{ }\mathbf{to}\mathbf{ }\mathbf{finished}\mathbf{ }\mathbf{goods} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{600}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{200}\mathbf{-}\mathbf{1}\mathbf{,}\mathbf{500} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{300} \end{gathered}$$

Step 3: Equivalent unit of production (EUP) for direct material

Particulars	Units	Completion %	EUP
Transferred units	1,500	100%	1,500
In process units	300	100%	300
Total equivalent unit of production for direct material			1,800

Step 4: Equivalent unit of production for conversion cost

Particulars	Units	Completion %	EUP
Transferred units	1,500	100%	1,500
In process units	300	60%	180
Total equivalent unit of production for conversion cost			1,680