Chapter 4, Problem 13P

To determine

The Cost perequivalent unit for each element of cost

Answer to Problem 13P

Solution: The statement showing the cost per equivalent unit for element is as under:

Equivalent Units:
			Transferred in Cost		Material Cost		Conversion Cost
			% Completion	Units	% Completion	Units	% Completion	Units
Units completed and transferred Ending Work in Process Total Equivalent units			100% 100%	50.00 1.00	100% 80%	50.00 0.80	100% 70%	50.00 0.70
				51		50.8		50.7

Explanation of Solution

The total cost of Transferred-in cost shall be the sum total of transferred in cost included in beginning work in process and added during the current period. The transferred-in cost per equivalent units shall be computed by dividing the total transferred-in cost by equivalent units of respective cost.

Requirement3:

To determine

The Cost of Ending work in process inventory in respect of material, conversion and in total

Answer to Problem 13P

Solution: The statement showing the cost of ending work in process is as under:

Ending Work in Process (1 unit)						Equivalent unit	Cost per EU	Total Cost
Transferred-in cost						1.00	1630	1630
Material cost						0.80	120	96
Conversion Cost						0.70	850	595
Total cost of Ending Work in process:								2,321

Explanation of Solution

The total cost of ending work in process shall be computed by multiplying the equivalent units of each element in ending work in process by cost per equivalent unit of respective element. The Summation of each element cost is the total cost of ending work in process.

Requirement4:

To determine

The Cost of goods completed and transferred out

Answer to Problem 13P

Solution: The statement showing the cost of units completed and transferred out shall be as under:

Units Completed and Transferred out (50 units)					Equivalent unit	Cost per EU	Total Cost
Transferred-in cost					50	1630	81500
Material cost					50	120	6000
Conversion Cost					50	850	42500
Total Cost of Units completed and transferred out:							130000

Explanation of Solution

The total cost of units completed and transferred out shall be computed by multiplying the equivalent units of each element in units completed (which is equal to completed units only) by cost per equivalent unit of respective element. The Summation of each element cost is the total cost of ending work in process.

Requirement5:

To determine

To show: The reconciliation statement showing the cost to account for and cost accounted for

Answer to Problem 13P

Solution: The reconciliation statement showing the cost to account for and accounted in ending work in process and completed units is as follows:

RECONCILIATION STATEMENT
TOTAL COST TO ACCOUNT FOR:
			Transferred-in	Material	Conversion
Beginning work in Process			1,670	90	605
Cost Added during May			81,460	6,006	42,490
Total Cost to account for:			83,130	6,096	43,095
Total Cost to account for:					132,321
TOTAL COST ACCOUNTED FOR:
Units Completed and Transferred out (50 units)
			Equivalent unit	Cost per EU	Total Cost
Transferred-in cost			50	1630	81500
Material cost			50	120	6000
Conversion Cost			50	850	42500
Total Cost of Units completed and transferred out:					130000
Ending Work in Process (1 unit)
			Equivalent unit	Cost per EU	Total Cost
Transferred-in cost			1.00	1630	1630
Material cost			0.80	120	96
Conversion Cost			0.70	850	595
Total cost of Ending Work in process:					2,321
Total Cost accounted for:					132,321
Difference (Total cost to account for-Total cost accounted)					Nil

Explanation of Solution

The total cost to account for is the total cost of beginning work in process and cost added during the period in the process. The total cost accounted for is the cost assigned to ending work in process and units completed and transferred out.

The reconciliation means there shall be not be any difference between the total cost to account for and total accounted in the period.

Conclusion

To conclude, it must be said that the equivalent units in each inventory shall multiplied with respective cost per equivalent unit and cost of each element is added up to arrive at the total cost of ending work in process and completed units.