Chapter 18, Problem 8BP

a.1

To determine

Prepare a schedule showing units started and completed in the Assembly department during March.

Explanation of Solution

Prepare a schedule showing units started and completed in the assembly department during March as follows:

Flow of Physical units: Assembly Department
Particulars	Units
Beginning work in process inventory	5,000
Add: units started	80,000
Units in process	85,000
Less: Ending work in process inventory	9,000
Units transferred to assembly department	76,000
Less: beginning work in process inventory	5,000
Units started and completed	71,000

Table (1)

2.

To determine

Compute the equivalent units of direct materials and conversion for the Assembly department during March.

Explanation of Solution

Prepare a schedule showing units started and completed in the forging department during March as follows:

Particulars	Direct materials	Conversion
Beginning work in process inventory	0	3,500
Units start and complete	71,000	71,000
Ending work in process inventory	9,000	7,200
Equivalent units of production	80,000	81,700

Table (2)

Working note:

Figure (1)

3.

To determine

Identify the cost per equivalent unit of input resource for the assembly department during March.

Explanation of Solution

Identify the cost per equivalent unit of input resource for the assembly department during March as follows:

Particulars	Direct materials	Conversion
Cost incurred by Forging department (A)	$720,000	$490,200
Equivalent units (B)	80,000	81,700
Cost per equivalent unit (A ÷ B)	$9	$6

Table (3)

4.

To determine

Prepare the journal entry to transfer units from Assembly department to the assembly department during March.

Explanation of Solution

Prepare the journal entry to transfer units from Assembly department to the assembly department during March as follows:

Account titles and Explanation	Debit	Credit
Work in process inventory - Packaging department	$1,140,000
Work in process inventory - assembly department		$1,140,000
(To record transfer of 76,000 units to the packaging department)

Table (4)

Working note:

Calculate total unit cost transferred.

Particulars	Amount
Beginning work in process inventory ($45,000 +$9,000)	$54,000
Add: Start and complete cost:
Materials (71,000 units × $9)	$639,000
Conversion (74,500 units × $6)	$447,000
Total cost of units transferred	$1,140,000

Table (5)

• Work in process inventory – packaging department is a current asset, and it is increased. Therefore, debit work in process inventory account – packaging department for $1,140,000.
• Work in process inventory – assembly department is a current asset, and it is decreased. Therefore, credit work in process inventory –assembly department account for $1,140,000.

5.

To determine

Compute cost assigned to ending inventory in the forging department on March 31.

Explanation of Solution

Compute cost assigned to ending inventory in the forging department on March 31 as follows:

$\begin{array}{c}\text{Ending work in process inventory = Direct materials + Conversion}\\ \text{=}\left(\text{9,000 units }\times \text{\$9}\right)+\left(\text{7,200}\text{units}\times \$6\right)\\ =\$81,000+\$43,200\\ =\$124,200\end{array}$

b.1

To determine

Prepare a schedule showing units started and completed in the packaging department during March.

Explanation of Solution

Flow of Physical units: Packaging Department
Particulars	Units
Beginning work in process inventory	4,000
Add: units started	76,000
Units in process	80,000
Less: Ending work in process inventory	20,000
Units transferred to assembly department	60,000
Less: beginning work in process inventory	4,000
Units started and completed	56,000

Table (6)

2.

To determine

Compute equivalent units of direct materials and conversion for the packaging department in March.

Explanation of Solution

Compute equivalent units of direct materials and conversion for the packaging department in March as follows:

Particulars	Direct materials	Conversion
Beginning work in process inventory	4,000	3,200
Units start and complete	56,000	56,000
Ending work in process inventory	-	6,000
Equivalent units of production	60,000	65,200

Table (7)

Working note:

Figure (2)

3.

To determine

Compute equivalent cost per unit of input resource for the packaging department during March.

Explanation of Solution

Compute equivalent cost per unit of input resource for the packaging department during March as follows:

Particulars	Direct materials	Conversion
Cost incurred by  department (A)	$840,000	$260,800
Equivalent units (B)	60,000	65,200
Cost per equivalent unit (A ÷ B)	$14	$4

Table (8)

4.

To determine

Prepare journal entry to record transfer units from the assembly department to finished goods inventory during March.

Explanation of Solution

Prepare journal entry to record transfer units from the assembly department to finished goods inventory during March as follows:

Account titles and Explanation	Debit	Credit
Finished goods inventory	$1,980,000
Work in process inventory - packaging department		$1,980,000
(To record transfer of 60,000 units to the assembly department)

Table (9)

Working note:

Calculate total unit cost transferred.

Particulars	Amount
Beginning work in process inventory ($60,000 +$3,200)	$63,200
Add: Start and complete cost:
Materials (60,000 units × $14)	$840,000
March forging materials (56,000 units × $15)	$840,000
Conversion (59,200 units × $4)	$236,800
Total cost of units transferred	$1,980,000

Table (10)

• Finished goods inventory is a current asset, and it is increased. Therefore, debit finished goods inventory account for $1,980,000.
• Work in process inventory – packaging department is a current asset, and it is decreased. Therefore, credit work in process inventory – packaging department account for $1,920,000.

5.

To determine

Compute the cost assigned to ending inventory in the packaging department.

Explanation of Solution

Compute cost assigned to ending inventory in the packaging department on March 31 as follows:

$\begin{array}{c}\text{Ending work in process inventory = Direct materials (assembly) + Conversion}\\ \text{=}\left(\text{20,000 units }\times \text{\$15}\right)+\left(\text{6,000}\text{units}\times \$4\right)\\ =\$300,000+\$24,000\\ =\$324,000\end{array}$