In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored. 1. To Calculate: Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

On December 31, 2023, Berclair Incorporated had 360 million shares of common stock and 12 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2024, Berclair purchased 40 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2024. • Four million treasury shares were sold on October 1. . Net income for the year ended December 31, 2024, was $600 million. Also outstanding at December 31 were 60 million incentive stock options granted to key executives on September 13, 2019. The options were exercisable as of September 13, 2023, for 60 million common shares at an exercise price of $60 per share. During 2024, the market price of the common shares averaged $80 per share. The options were exercised on September 1, 2024. Required: Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2024. (Shares for stock options and conversion of convertible securities have…

Logan product computes it's predetermined overhead rate solution this question

ANSWER

Answer 2

Question

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Answer 6

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

Answer 7

Chapter 20, Problem 2APSA

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

1. To Calculate:

Our objective is to calculate Equivalent units of production with respect to direct material and conversion.

Answer 8

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Equivalent units for Direct Material are 880000 Units and

Equivalent units for conversion are 754000.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Answer 13

Conclusion

Equivalent units with respect to Direct Material are 880000 units and for Conversion are 754000 units.

Answer 14

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

Answer 15

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

2. To Calculate:

Our objective is to calculate Direct Material cost and conversion cost per Equivalent units of production.

Answer 16

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost per Equivalent units is $ 3 and

Conversion cost per Equivalent unit is $ 4.5

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost per Equivalent unit = 2640000/880000 = $ 3

Conversion Cost per Equivalent unit = 3393000/754000 = $ 4.5

Answer 21

Conclusion

Direct Material Cost per Equivalent unit is $ 3 and Conversion cost per Equivalent unit is $ 4.5

Answer 22

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

Answer 23

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

3. To Calculate:

Our objective is to compute the Direct Material Cost and conversion cost assigned to

Units completed and Transferred out

Ending WIP units.

Answer 24

Expert Solution

Answer to Problem 2APSA

Solution:

Based on Explanation given below:

Direct Material cost assigned to units completed and transferred out is $ 2,100,000.

Direct Material Cost Assigned to WIP Units is $ 540,000

Conversion Cost Assigned to units completed and transferred out is $ 3,150,000.

Conversion cost assigned to WIP units is $ 243,000.

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60000	100%	60000	420000
Introduced during the month	820000			2220000
Total	880000		880000	2640000	3
Completed - Opening	60000	100%	60000	180000
Started and Completed	640000	100%	640000	1920000
Closing	180000	100%	180000	540000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60000	80%		139000	559000
Introduced during the month	820000			3254000	5474000
Total	880000		754000	3393000	6033000
Completed - Opening	60000	100%	60000	270000	450000
Started and Completed	640000	100%	640000	2880000	4800000
Closing	180000	30%	54000	243000	783000

Direct Material cost assigned to units completed and transferred = $ 180000+1,920,000.00= $2,100,000

Conversion cost assigned to units completed and transferred = $ 270,000+ $2,880,000 = $3,150,000

Answer 29

Conclusion

Type of cost	Units completed and transferred	WIP Units
Direct Material	$2100000	$540000
Conversion	$ 3150000	$243000

Answer 30

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta

Answer 31

To determine

Introduction:

In Process Costing we treat all units produced as having uniform cost of production based on their stage of completion. There is distinction being maintained in FIFO Basis and Weighted average basis by treatment of opening stock of WIP. In case of FIFO – opening WIP is considered based on its completion percentage while in Weighted average method – stage of completion of opening WIP units is ignored.

To Calculate:

The Closing units are 60% complete with Labour in place of 30%. Determine its impact on Nov Financial Statements.

Answer 32

Expert Solution

Answer to Problem 2APSA

Solution:

Because of the error – conversion Equivalent units changed from 754000 units to 808000 units. The per unit cost of conversion of equivalent units should be $ 4.2 in place of $4.5 reported earlier. The costs of units completed and transferred was reported higher by $ 210520 and Work in Progress units were stated at lower value of $ 783000 in place of $ 993,520.

Answer 33

Expert Solution

Answer 34

Expert Solution

Answer 35

Expert Solution

Answer 36

Explanation of Solution

Victory Company
	Direct Material
	No of Units	% complete	Equivalent Units	Cost

Opening WIP Units	60,000	100%	60,000	420,000
Introduced during the month	820,000			2,220,000
Total	880,000		880,000	2,640,000	3
Completed - Opening	60,000	100%	60,000	180,000
Started and Completed	640,000	100%	640,000	1,920,000
Closing	180,000	100%	180,000	540,000

	Conversion				Total Material + Conversion
	No of Units	% complete	Equivalent Units	Cost	Total Material + Conversion

Opening WIP Units	60,000	80%		139,000	559,000
Introduced during the month	820,000			3,254,000	5,474,000
Total	880,000		808,000	3,393,000	6,033,000
Completed - Opening	60,000	100%	60,000	251,955	431,955
Started and Completed	640,000	100%	640,000	2,687,525	4,607,525
Closing	180,000	60%	108,000	453,520	993,520

Impact of wrong estimation of degree of completion in conversion charges in Closing Work In Progress is calculated as under:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Answer 37

Conclusion

Note for Plant manager:

The Plant Manager

Victory Company

Hi

It has come to our notice that Work in progress units were erroneously reported as 30% complete for conversion cost in place of them to be 60% complete. In view of the error – our units Equivalent units calculation was short reported by 54000 units. This further resulted in higher per unit cost of each equivalent unit cost of conversion to $ 4.5 in place of $ 4.2. As a result our cost of Units completed and transferred were reported at higher cost by $ 210520 lowering the profitability of November Month by $ 210520. The closing Work in Progress value was under reported by $ 210520 and therefore our aggregate Current Asset was also under reported by $ 210520. We have summarized the impact in following table:

Impact on Conversion Cost	EARLIER	Now	Difference
No of Equivalent units	754,000	808,000	54,000

Cost of Units completed and transferred	$	$	$
Opening Units	270,000	251,955	(18,045)
Started and Completed	2,880,000	2,687,525	(192,475)
Closing WIP	243,000	453,520	210,520

Nov Profitability should be higher by $ 210520 and Nov Current Assets would be higher by $ 210520.

We should take strict measures so that these errors are not repeated in future and cost estimates submitted to Accounts and Finance department are accurate to ensure correct information and reports to all concerned.

Thanks

Vijay Gupta