Hand Out Problem HO-18A
The Atlas Steel Company produces various steel related products, which are manufactured
through several processing departments. The following data is presented for the first
processing department - Melting.
(a) All direct materials are added at the beginning of the production process.
(b) Conversion costs are incurred evenly throughout the production process.
(c) The Melting Department’s beginning inventory on January 1 was 7,500 units
(30% complete), with total costs charged to date of $33,600 for materials and
$14,400 for conversion costs.
(d) A total of an additional 54,000 units were started into production during January.
(e) Completed production for the month totaled 56,000 units.
(f) The January 31 work-in-process (WIP) of unfinished units totaled 5,500 and were
60% of the way through the production process.
(g) Direct materials costing $318,600 were placed in production during January.
Also, direct labor of $100,610 and manufacturing overhead of $36,310 were
assigned to the department during January.
Requirements:
Prepare a Production Cost Report for the Melting Department. Use the attached problem
solution worksheets to complete the homework assignment.
(1) Summarize total costs to account for.
(2) Summarize the flow of production in physical units.
(3) Compute output in terms of equivalent units (materials and conversion).
(4) Compute cost per equivalent unit.
(5) Assign total costs to units completed and to units in the ending work-in-process
inventory.
Check Answer: Ending WIP = $40,370
1
Problem HO-18A
(Solution Worksheet)
ATLAS STEEL COMPANY
Production Cost Report - Melting Department
For the Month Ended January 31, 20XX
2
Costs Charged to Production:
(1) Costs of beginning work-in-process:
Direct materials…………………………$
Conversion costs…….………………...
(2) Costs incurred this period:
Direct materials…………………………$
Conversion costs……………………….
Total costs to account for……....………........
$
$
Unit Accountability Information:
Units to account for:
Beginning work-in-process…....
Units started this period………..
Total units to accounted for…...
Units accounted for:
Completed & transferred out…..
Ending work-in-process……......
Total units accounted for…….…
Continued
3
Equivalent Units of Production:
Equivalent Units
Units to complete beginning work-in-process:
Materials Conversion
Direct materials (
x
%)……………….………..........
Conversion (
x
%)…………......……………............
Units started and completed (
%)...…..................
x
Units of ending work-in-process:
Direct materials (
x
%)…..…..……………...............
Conversion (
x
%)…..………………………………...
Equivalent units of production..……………………..................
Costs per Equivalent Unit:
Costs
Materials
Conversion
Unit costs:
Costs incurred this period ……………........... $
Total equivalent units…………………............ ÷
Cost per equivalent unit………………............ $
Cost Assignment and Reconciliation:
Cost of beginning work-in-process…………......................
$
÷
$
$
Cost to complete beginning work-in-process:
Direct materials (
EU x $
)…………….... $
Conversion (
EU x $
)……………….......
Cost of units started and completed this period:
Direct materials (
EU x $
).…………...... $
Conversion (
EU x $
)…………...……....
Total cost of goods finished this period………...................
Cost of ending work-in-process:
Direct materials (
EU x $
Conversion (
EU x $
$
)…….……...... $
)…………..............
Total costs accounted for………………………..........................
4
$
Problem HO-18A Supporting Schedule (Equivalent Unit Computations)
Materials:
Production Units Status
Beginning Inventory (
Physical
Units
Factor
Added
Equivalent
Units
Physical
Units
Factor
Added
Equivalent
Units
)...........
Started and Completed....................
Ending Inventory (
).................
Total Equivalent Units..................
Conversion:
Production Units Status
Beginning Inventory (
)...........
Started and Completed....................
Ending Inventory (
).................
Total Equivalent Units..................
5
Production Cost Report (Example)
Costs Charged to Production:
(1) Costs of beginning work-in-process:
Direct materials…………………………$ 24,550
Conversion costs………………………. 3,600
(2) Costs incurred this period:
Direct materials…………………………$ 50,000
Conversion costs…………………….... 9,690
Total costs to account for………....…....
$ 28,150
59,690
$ 87,840
Unit Accountability Information:
Units to account for:
Beginning work-in-process……... 500
Units started this period………....1,000
Total units to accounted for….....1,500
Units accounted for:
Completed & transferred out….... 1,100
Ending work-in-process…..……... 400
Total units accounted for………… 1,500
Equivalent Units of Production:
Equivalent Units
Materials Conversion
0
150
600
600
Beginning work-in-process:
Direct materials (500 x 0%)……………………….………...
Conversion (500 x 30%)……………….………………….....
Started and completed…………………………....................
Ending work-in-process:
Direct materials ( 400 x 100%)…………..….......……........
Conversion (400 x 25%)……………………………………..
Equivalent units of production………………………...........
Costs per Equivalent Unit:
Unit costs:
Costs incurred this period ……………..
Total equivalent units…………………...
Cost per equivalent unit………………...
400
Materials
Costs
Conversion
$50,000
÷ 1,000
$ 50.00
$9,690
÷ 850
$11.40
Cost Assignment and Reconciliation:
Cost of beginning work-in-process………...…..................
Cost to complete beginning work-in-process:
Direct materials ( 0 EU x $50.00)…………….............. $
6
100
850
1,000
$28,150
0
Conversion (150 EU x $11.40)………………...............
1,710
Cost of units started and completed this period:
Direct materials (600 EU x $50.00)…………............... $30,000
Conversion (600 EU x $11.40)………………..............
6,840
Total cost of goods finished this period………...............
Cost of ending work-in-process:
Direct materials (400 EU x $50.00)…….........……...... $20,000
Conversion (100 EU x $11.40)…………......................
1,140
Total costs accounted for…....…………………….............
7
1,710
36,840
$66,700
21,140
$87,840