Question

Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.

Beginning inventory:
DIrect materials $24,000
Conversion costs $35,000
Manufacturing costs added during the accounting period:
Direct materials $168,000
Conversion costs $278,000
1. What were the equivalent units for conversion costs during February? (HINT: The answer is 81,500, but I need work to support this)
2. What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February? (HINT: The answer is $23,000, but I need work to support this)

Answer 1

1) total equivalent units:

materials = 73,000

conversion = 81,500

2) costs assigned to ending WIP:

materials = $23,013.70

conversion = $27,288.32

Step-by-step explanation:

beginning WIP 78,000 + 10,000 - 73,000 = 15,000

materials = 100% (0 added during the period)

conversion = 30% (70% added during the period, 10,500 EU)

units started 73,000

units finished 78,000

units started and finished = 63,000

ending WIP 10,000

materials = 100%

conversion = 80%, 8,000 EU

Beginning WIP

Materials $24,000

Conversion $35,000

Costs added during the period:

Materials $168,000

Conversion $278,000

total equivalent units:

materials = 73,000

conversion = 10,500 + 63,000 + 8,000 = 81,500

cost per EU:

Materials = $168,000 / 73,000 = $2.30137

Conversion = $278,000 / 81,500 = $3.41104

costs assigned to ending WIP:

materials = 10,000 x $2.30137 = $23,013.70

conversion = 8,000 x $3.41104 = $27,288.32