Question

Howorth Dental Products is a London-based producer of a patented anti-microbial dental floss. All raw material is introduced at the beginning of the production process, but considerable processing time is needed to create the anti-microbial qualities of the specially designed floss. Howorth measures output in meters of floss and applies the weighted-average process costing method. The following information is available for a recent period:

Beginning work in process inventory:

141,000 meters at a cost of £46,100 for direct materials, £25,000 for direct labor, and £25,000 for factory overhead. The conversion process was 60% complete.

Units started into production: 261,000 meters

Units completed and transferred to finished goods: 383,000 meters

Ending work in process inventory: 19,000 meters, 35% complete

Additional costs incurred during the period:

Direct materials, £85,800

Direct labor, £98,300

Factory overhead, £98,700

Prepare a cost of production report for Howorth.

A.
Equivalent units of direct material

402,000

Equivalent units of direct labor

389,650

Equivalent units of overhead

389,650

Costs per equivalent unit

$0.962

Transferred to Finished Goods

$368,446

Total Ending Work in Process

$10,449

Total Cost Allocation

$378,895

B.
Equivalent units of direct material

413,000

Equivalent units of direct labor

396,350

Equivalent units of overhead

392,350

Costs per equivalent unit

$0.9759

Transferred to Finished Goods

$46,057

Total Ending Work in Process

$10,343

Total Cost Allocation

$478,400

C.
Equivalent units of direct material

401,000

Equivalent units of direct labor

378,350

Equivalent units of overhead

382,350

Costs per equivalent unit

$0.9439

Transferred to Finished Goods

$367,657

Total Ending Work in Process

$10,123

Total Cost Allocation

$558,160

D.
Equivalent units of direct material

425,000

Equivalent units of direct labor

395,350

Equivalent units of overhead

398,350

Costs per equivalent unit

$0.9539

Transferred to Finished Goods

$367,647

Total Ending Work in Process

$220,323

Total Cost Allocation

$587,170

E.
Equivalent units of direct material

400,000

Equivalent units of direct labor

364,350

Equivalent units of overhead

322,350

Costs per equivalent unit

$0.9439

Transferred to Finished Goods

$347,977

Total Ending Work in Process

$331,763

Total Cost Allocation

$678,430

Answer 1

Choice A is the correct answer

Step-by-step explanation:

Howorth Dental Products

Cost of Production Report

Equivalent Units Materials Conversion Costs

Finished Goods 383000 383000

Ending WIP 19000 6650 ( 19000* 35%)

Total Equivalent Units 402,000 389650

Costs Material D.LAbor FOH

Preceding Department 46,100 25,000 25000

Added 85,800 98,300 98,700

Total Costs 131,900 123,300 123,700

Material Costs Per Equivalent Unit = 131,900/ 402,000= 0.328

Direct LAbor Costs Per Equivalent Unit = 123,300/ 389,650=0.316

FOH Costs Per Equivalent Unit = 123,700/ 389,650=0.317

Total Cost per Equivalent unit = 0.328 + 0.316+0.317= 0.961≅ 0.962 (rounding would give a difference)

Costs Transferred to Finished Goods = 0.962* 383,000= $368,446

Costs OF Ending work in Process = 0.328 * 19,000 + 0.316* 6650 + 0.317 * 6650

Costs of Ending WIP= 6232 +2108.5+ 2101.4= 10,441.9

Total Cost Allocation= 368,446 + 10,441.9= 378,887.9

Equivalent units of direct material 402,000

Equivalent units of direct labor 389,650

Equivalent units of overhead 389,650

Costs per equivalent unit $0.962

Transferred to Finished Goods $368,446

Total Ending Work in Process $10,449

Total Cost Allocation $378,895

There's a minute difference in the WIP ending Inventory Costs ( 10449 - 10441.9 = 7.1)and Total Costs ($378,895-378,887.9= 7.1) which is only due to rounding off. If you round off you will get the exact figures as given in the option.