Question

Exercise 16-05 a-b (Video) In Waterway Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its Sterilizing Department in selected months during 2020 are as follows. Beginning Work in Process Ending Work in Process Month Units Conversion Cost% Units Transferred Out Units Conversion Cost% January 0 — 11,100 3,100 63 March 0 — 12,300 3,400 40 May 0 — 15,400 7,860 80 July 0 — 10,200 2,200 46 Compute the physical units for January and May. January May Units to be accounted for Beginning work in process Started into production Total units Units accounted for Transferred out Ending work in process Total units Compute the equivalent units of production for (1) materials and (2) conversion costs for each month. Materials Conversion Costs January March May July

Answer 1

(a) Total units for January = 14,200

Total units for May = 23,260

(b). Conversion cost for :

January = 13,053

March = 13,660

May = 21,688

July = 11,212

Step-by-step explanation:

As per the data given in the question,

1)

Jan. May

Units to be accounted for

Beginning WIP 0 0

Started into production 14,200 23,260

Total number units 14,200 23,260

Units accounted for

Transferred out 11,100 15,400

Ending WIP 3,100 7,860

Total units 14200 15400

2)

We can calculate the conversion cost by using following formula:

Conversion cost = Transferred out unit + (Work in process unit × conversion cost)

Material Conversion cost

Jan. 14,200 13,053 (11,100 + 3,100 × 63%)

Mar. 15,700 13,660 (12,300 + 3,400 × 40%)

May 23,260 21,688 (15,400 + 7,860 × 80%)

July 12,400 11,212 (10,200 + 2,200 × 46%)