Problem 20-2A (50 minutes)
Part 1
(a) and (b) Equivalent units with respect to direct materials and conversion
Direct
Equivalent units of production (EUP) Materials Conversion
Units completed and transferred out………………. 700,000 700,000
Units of ending Work in Process……………………..
Part 2
Cost per equivalent unit of production
Direct
Materials Conversion
Costs of beginning Work in Process………………………$ 420,000 $ 139,000
Part 3 Assigning product costs to units
Costs transferred out
Direct materials (700,000 EUP x $3.00 per EUP)…….$2,100,000
Conversion (700,000 EUP x $4.50 per EUP)……..…… 3,150,000
(a) Total costs transferred out…………………………….. $5,250,000
Costs of ending work in process
Problem 20-2A (Concluded)
Part 4
MEMORANDUM
TO:
FROM:
DATE:
RE: Percentage of Completion Error Analysis
If the units in ending inventory are 60% complete instead of 30% with
respect to conversion, the number of equivalent units in ending inventory
Regarding financial statements, this error causes an overstatement of cost
of goods sold and an understatement of net income on the income
statement for November. On the November 30 balance sheet, the Work in
Process inventory and retained earnings are understated; therefore total
assets and equity are also understated.
Problem 20-3A (75 minutes)
Part 1
Weighted average
Units Fast Co. – units
Units in Beg. inventory 30,000 Beg. Inv 30,000
FAST CO.
Process Cost Summary – Weighted Average Method
For the month ended October 31
Costs Charged to Production
Costs of beginning work in process
Direct materials………………………………………………………. $ 17,100
Conversion…………………………………………………………….. 67,200 $ 84,300
Unit cost information
Units to account for Units accounted for
Problem 20-3A (concluded)
Equivalent units of production
Direct
Materials Conversion
Units completed & transferred out….. 150,000 EUP 150,000 EUP
Units of ending work in process
Cost per EUP
Direct
Materials Conversion
Cost of beginning work in process….. $17,100 $67,200
Cost assignment and reconciliation
Costs transferred out
Direct materials (150,000 EUP x $0.95 per EUP)..… $142,500
Part 2
Problem 20-4A (80 minutes)
Part 1
TAMAR CO.
Process Cost Summary – Weighted Average Method
For Month Ended May 31
Costs Charged to Production
Costs of beginning work in process
Direct materials……………………………………………………….$ 19,800
Conversion…………………………………………………………….. 221,940 $ 241,740
Costs incurred this period
Unit cost information
Units to account for Units accounted for
Beginning work in process………………………………3,000 Completed & transferred out…………22,200
Equivalent units of production
Direct
Materials Conversion
Units completed & transferred out……. 22,200 EUP 22,200 EUP
Units of ending work in process………
Cost per EUP
Direct
Materials Conversion
Cost of beginning work in process..... $ 19,800 $ 221,940
[Continued on next page]
Problem 20-4A (Concluded)
Cost assignment and reconciliation
Costs transferred out
Direct materials (22,200 EUP x $21.00 per EUP)……………..$ 466,200
Part 2
May 31 Finished Goods Inventory……………………………………..2,664,000
Part 3
3a. Two major estimates are the: i) overhead allocation rate, and ii)
percentage of completion for materials and conversion.
3b. Management might want an overhead allocation rate that assigns the
least amount of overhead applied to their respective production