MANAGEMENT ACCOUNTING CONCEPTS AND TECHNIQUES

By Dennis Caplan, University at Albany (State University of New York)

 

 

CHAPTER 14:  Work-in-Process

 

Exercises and Problems:

 

14-1: In applying the weighted-average method for equivalent unit cost calculations, which of the following information do you not need to know?

 

(A)       Production costs incurred during the period.

 

(B)       The equivalent units in beginning work-in-process inventory.

 

(C)       The cost of beginning work-in-process inventory.

 

(D)       All of the above must be known, in order to calculate the cost per equivalent unit.

 

 

14-2:

A) Six units were in beginning work-in-process (WIP) at the beginning of May. These units were 100% complete with respect to direct materials, and 50% complete with respect to conversion costs. During the period, these six units were completed, and another eight units were started. At the end of the period, four of these eight units were completed, and the other four units were 100% finished with respect to direct materials, and 75% complete with respect to conversion costs. Following is pertinent cost information:

 

                                                Beginning WIP                                   Costs added in May

            Direct Materials          $600                                        $3,600

            Conversion costs         $600                                        $2,200

 

            Required: Calculate the cost per equivalent unit, using the weighted-average method.

 

B) 250 units were in beginning work-in-process at the beginning of September. These units were 100% complete with respect to direct materials, and 50% complete with respect to conversion costs. At the end of September, 100 units were in ending work-in-process. These units were 80% complete with respect to direct materials, and 40% complete with respect to conversion costs. 80 units were started during the period.

 

Required: How many units were transferred out of the Work-in-Process account and into the Finished Goods account during September?

 

 

14-3:

A) A company starts the week with zero units of work-in-process inventory and zero units of finished goods inventory. The company starts and completes production of nine units. The company starts a tenth unit, but it is not complete by the end of the week. It is 60% complete with respect to both materials and conversion costs. $1,900 in materials was transferred during the week from raw materials inventory to work-in-process inventory. $940 in conversion costs was incurred and debited to work-in-process inventory during the week.

 

Required: Calculate the cost per equivalent unit for units transferred from WIP to finished goods inventory.

 

B) A company starts the week with zero units of work-in-process inventory and zero units of finished goods inventory. The company starts and completes production of nine units. The company starts a tenth unit, but it is not complete at the end of the week. It is 100% complete with respect to materials and 50% with respect to conversion costs. $1,900 in materials was transferred during the week from raw materials inventory to work-in-process inventory. $940 in conversion costs was incurred and debited to work-in-process inventory during the week.

 

Required: Calculate the cost per equivalent unit for units transferred from WIP to finished goods inventory.

 

C) The company starts the week with zero units in finished goods inventory, and one unit in work-in-process. The one unit in WIP is 60% complete with respect to both materials and conversion costs, and it is carried at a cost of $150. During the week, the company completes this one unit, starts and completes ten more units, and starts production of yet another unit, but this last unit is only 30% complete with respect to both materials and conversion costs at the end of the week. The company incurred $2,840 in materials and conversion costs during the week (i.e., this was the cost transferred into WIP during the week).

 

Required: What is the cost of each unit transferred to finished goods inventory during the week, using the weighted-average method?

 

 

14-4: The factory started the period with 10 units. These units were 40% complete with respect to materials, and 50% complete with respect to conversion costs. The cost of this beginning WIP was $100 with respect to materials, and $70 with respect to conversion costs. During the period the factory completed these 10 units, and started production of another 6 units. Of the 6 units started during the period, 2 were finished, and 4 were still in WIP at the end of the period. These 4 units were 50% complete with respect to materials and 25% complete with respect to conversion costs. Manufacturing costs incurred during the period were $2,700 for materials and $1,230 for conversion costs.

 

Required: Calculate the cost per equivalent unit using the weighted-average method.

 

 

14-5:

A) In the mixing department, all the direct materials are added at the beginning of the processing. Beginning work-in-process inventory consists of 2,000 units with a direct materials cost of $31,860. During the period, 15,000 units are started and direct materials costing $250,000 are charged to the department. If there are 1,000 units in ending inventory, what is the cost per equivalent unit using the weighted-average method?           

 

(A)             $15.93

(B)              $15.63

(C)              $14.83

(D)       $16.58

 

B) The molding department started 15,250 units in September and finished 16,625 units. If the ending work-in-process inventory was 500 units, what was the beginning work-in-process inventory?

 

(A)                875 units

(B)              1,375 units

(C)              2,375 units

(D)             1,875 units

 

C) Alex Company has 15,000 units in ending work-in-process inventory, which are 100% complete with respect to materials and 60% complete with respect to conversion costs. The cost per unit for the month for materials is $3.00 and for conversion is $1.30. What is the value of the ending work-in-process using the weighted-average method?

 

(A)       $64,500

(B)       $38,700

(C)       $45,780

(D)       $56,700

 

 

14-6: The factory has zero beginning inventory, starts and completes 400 units, and starts production of another 200 units, but these 200 units are not finished at the end of the period. These 200 units are 50% complete with respect to materials, and 30% complete with respect to labor and overhead. During the period, the factory spent $10,000 on materials and $4,600 on labor and overhead. Calculate the cost per equivalent unit using the weighted-average method.        

 

 

14-7: Kent Plastics began the period with 50 units that were 100% complete with respect to materials and 50% complete with respect to conversion costs. During the period, Kent began production of another 100 units. At the end of the period, there were 60 units, 100% complete with respect to materials and 50% complete with respect to conversion costs. Calculate the equivalent units produced during the period with respect to conversion costs. (Note: This is not the denominator in the weighted-average method for determining the cost of production. Rather, it is a measure of the level of production activity during the period.)

 

 

14-8: 60 units were in beginning WIP. These units were 50% complete with respect to materials and conversion costs. 50 units were in ending WIP.  These units were also 50% complete with respect to materials and conversion costs. During the period, 90 units were transferred from WIP to Finished Goods. How many units were started during the period?

 

 

14-9: VHI company started 2003 with 100 units in beginning work-in-process (WIP) that were 100% complete with respect to materials and 50% complete with respect to conversion costs. The cost of this beginning WIP was $5,000 for materials and $3,000 for conversion costs. During 2003, VHI complete these 100 units, and started another 100 units. At the end of 2003, VHI had 50 units in ending WIP that were 100% with respect to materials and 10% complete with respect to conversion costs. VHI incurred materials costs of $4,000 and conversion costs of $1,500 in 2003. Compute the cost per equivalent unit using the weighted-average method. 

 

 

14-10: The factory has zero beginning inventory, starts and completes 100 units, and starts production of another 200 units, but these 200 units are not finished at the end of the period. These 200 units are 100% complete with respect to materials, but only 50% complete with respect to labor and overhead. During the period, the factory spent $3,000 on materials and $8,000 on labor and overhead. Calculate the cost per equivalent unit.        

 

 

14-11: The factory started the period with 20 units on hand. These units were 100% complete with respect to materials and 50% complete with respect to conversion costs. The factory shipped 200 finished units to the warehouse. The factory ended the period with 40 units. These 40 units were 100% complete with respect to materials and 20% complete with respect to conversion costs. Each unit requires one yard of fabric. How many yards of fabric did the factory need to move from the storeroom to the factory floor during the period (this is also the number of units started during the period)?

 

 

 

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Management Accounting Concepts and Techniques; copyright 2006; most recent update: November 2010

 

For a printer-friendly version, contact Dennis Caplan at dcaplan@uamail.albany.edu