Question

Angerstein Inc. produces calendars in a two-process, two-department operation. In the Printing Department, calendars are printed and cut. In the Assembly Department, the material received from Printing is assembled into individual calendars and bound. Each department maintains its own Work in Process Inventory, and costs are assigned using FIFO process costing. In Assembly, conversion costs are incurred evenly throughout the process; direct material is added at the end of the process. For September, the following production and cost information is available for the Assembly Department:

• Beginning WIP Inventory: 5,000 calendars (30 percent complete as to conversion); transferred in cost, $7,550; conversion cost, $1,093
• Transferred in during September: 80,000 calendars
• Current period costs: transferred in, $80,000; direct material, $10,270, conversion, $13,991
• Ending WIP Inventory: 6,000 calendars (80 percent complete as to conversion) For the Assembly Department, compute the following:
a. Equivalent units of production for each cost component EU for transferred in 85,000 x EU for direct materials 79,000 EU for conversion 83,800 x
b. Cost per EUP for each cost component Note: Round your answers to two decimal places. Transferred in cost per EUP $ 87.550 X Material cost per EUP Conversion cost per EUP $ 0 x
c. Cost transferred to Finished Goods Inventory Note: Round your final answer to the nearest whole dollar. $ 105,860
d. Cost of ending WIP Inventory Note: Round your final answer to the nearest whole dollar. $ $ 7,044

Answer 1

a) EU for transferred in costs = 80,000

EU for materials costs = 79,000

EU for conversion costs = 82,300

b) cost per EU for transferred in costs = $1

cost per EU for materials costs = $0.13

cost per EU for conversion costs = $0.17

c) costs transferred to finished goods inventory = $106,088

d) cost of ending WIP = $6,816

Step-by-step explanation:

units completed = 5,000 + 80,000 - 6,000 = 79,000

beginning WIP 5,000 units:

transferred in costs $7,550

30% completed for conversion costs ($1,093)

0% completed for materials

current period:

transferred in costs $80,000, cost per EUP = $80,000 / 80,000 = $1.00

materials $10,270, cost per EUP = $10,270 / 79,000 = $0.13

conversion $13,991, cost per EUP = $13,991 / [(5,000 x 70%) + 74,000 + (6,000 x 80%)] = $13,991 / 82,300 = $0.17

costs transferred to finished goods inventory = (74,000 x $1) + (79,000 x $0.13) + (77,500 x $0.17) + $7,550 + $1,093 = $106,088

ending WIP = (4,800 x $0.17) + $6,000 = $6,816