Process costing (accounting) question

2008-10-27 4:39 am

This is a question about process costing:

Howell Super Server produces a single model, HM24, in a continuous production process. 80% of materials are added at the beginning of production and the other 20% are added immediately before transfer to the finished goods warehouse. Conversion costs are assumed to be added evenly throughout the process. At the end of Oct 2006, there were four servers in process, 60% complete as to labor and overload. 85% servers were completed during the month. Assume that direct materials cost per equivalent unit during Oct was2500, labor cost per equivalent unit was 1000, and overhead per equivalent unit was 2000. Determine cost of ending WIP inventory and the cost of items completed and transferred to FGI

What should I do? (especially in a part of the direct material added)

回答 (1)

用戶96648

2008-10-28 7:12 am

✔ 最佳答案

85% completed in this month, so, 15% incompleted. It also say 4 servers in process. So, 4 serves = 15%, then 4/15% = 27. (oh, you must count one by one for the server). 27 is total, 4 is still making, then, 27-4=23 is completed.

For 23 completed servers, this is easy parts Bcause labor cost is 1,000 per unit, and Direct material =2500, Overhead=2000, these are given in the question.
Add them up = 5500. So, 23 serves x 5500 each = 126,500. This is the cost of items completed and transferred to FGI.

For the 4 servers , let us work on one server first.
80% material assigned, so, direct material for one unit 2,500 x 80% =2,000.
Labor + overhead per unit =3,000. Question told 60% completed at end of Oct, so, 3000 x 60% = 1800.
Add up 2,000+1,800=3,800 per server.
3800 x 4 server = 15200 is your WIP law.

There is 20% of material (200) is not assigned , and that will only assign when the server is completed, see line 2 in your question. Since the question did not tell how to allocate the overhead and labor, so, simple proportion to the % of the production completeness.

Done. Enjoy your day.

參考: Myself.

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