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Required: If Green Machine Company Used The FIFO and The Weighted Average Methods of

Green Machine uses process costing for its ride-on mower assembly line. In September, they started 2,000 mowers and transferred out 2,800 finished mowers. Using FIFO, the total manufacturing cost per mower is $519.05. The cost of finished goods is $1,496,100 and the ending work-in-process inventory cost is $183,800. Using weighted average, the total manufacturing cost is $534 per mower. The cost of finished goods is $1,494,990 and the ending work-in-process inventory cost is $184,910.

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rook semay
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247 views

Required: If Green Machine Company Used The FIFO and The Weighted Average Methods of

Green Machine uses process costing for its ride-on mower assembly line. In September, they started 2,000 mowers and transferred out 2,800 finished mowers. Using FIFO, the total manufacturing cost per mower is $519.05. The cost of finished goods is $1,496,100 and the ending work-in-process inventory cost is $183,800. Using weighted average, the total manufacturing cost is $534 per mower. The cost of finished goods is $1,494,990 and the ending work-in-process inventory cost is $184,910.

Uploaded by

rook semay
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. Green Machine is a company that makes ride-on mowers for home use.

The company utilizes


an assembly-line manufacturing system to make the mowers. The company uses process
costing as it does not keep track of each individual mower's costs. Materials are added at the
beginning of the process and conversion costs are uniformly incurred. At the beginning of
September, the beginning work-in-process inventory was 75% complete (i.e.100% for direct
material and 75% for conversion cost) and at the end of the month it was 50% complete
(i.e.100% for direct material and 50% for conversion cost). The following information
pertains to the month of September:
Beginning work-in-process inventory 1,200 mowers
Units started 2,000 mowers
Units placed in finished goods (transferred-out) 2,800 mowers
Conversion costs added in September $250,000
Cost of direct materials for September $800,000
Beginning work-in-process costs include
Materials $450,000
Conversion $180,000
Required: if Green Machine company used the FIFO and the weighted average methods of
process costing
1) What is the total manufacturing cost per mowers for September?
2) Determine the costs that would be assigned to
a) Finished goods inventory
b) Ending work-in-process inventory

Solution
I) FIFO method
1) Total manufacturing cost

Step 1: compute physical unit

Unit to be accounted for


WIP, sep---------------------------------------------1200
Started (transferred) into product---------------2000
Total unit--------------------------------------------------3,200
Units accounted for
Complete and transferred out
WIp,sep----------------------------------------------1200
Started completed---------------------------------1600
Total complete transferred out-------------------------2800
WIP Sep 30-----------------------------------------------400
Total unit------------------------------------------------3,200

Step 2: compute equivalent unit


Equivalent unit Physical unit materials conversion
WIP,sep1----------------- 1200---------------------------------------0=0 25%=300
Started and finished-----1600-----------------------------------------100%=160 100%=1600
WIp,sep30----------------400-------------------------------------------100%=400 50%=200
Total-----------------------3,200-------------------------------------------2000---------------------2100

Total equivalent unit = unit of material + equivalent conversion

=2000+2100

T.EQU.UNITS = 4,100 unit

step3: compute unit production cost

Production cost incurred during current period = direct material cost + conversion cost

=800,000+250,00

Total cost =1,050,000

Computation of unit cost

Unit material cost=total material cost

equivalent units of material

=800,000

2,000

u. material cost =400

Unit conversion cost=total conversion cost


equ. units of conversion

=250,000

2,100

unit conv. cost =119.05

Total manufacturing cost per move=unit material cost+unit conversion cost

=400+119.05

T.M. Cost =519.05

2. a) cost of unit transferd out

Material conversion total

cost in beginnig wIp inventory-----------------------------$50,000---- $180,000------------630,000

cost to complete beginning WIP

Equivalent unit to complete-----------------------------0------------------300

Cost per equivalent unit---------------------------------400----------------119

Cost to complete beginning WIP-----------------------------------------------35,700----------35,700

Cost of unit started and completed

Unit started and completed----------------------------1,600--------------1,600

Cost per equivalent unit---------------------------------400-----------------400

Cost of unit started and completed------------------640,000----------------190,400-------830,000

cost of unit transferred out--------------------------------------------------------------------------1,496,100

:- cost unit transferred out = 1,496,100

b) cost of ending wIp

material conversion

equivalent units------------------------400 -----------------200


cost per equivalent--------------------400------------------119

cost of ending wIp inventory------160,000--------------23,800

Total cost of ending wIp inventory =cost of material ending wIp+ cost of conversion ending wIp

=160,000+23,800

T.c. ending WIP =$183,800

(7) II) WEIGHTED AVERAGE METHOD

1) Total manufacturing cost

step1: compute physical unit flow

Units to be accounted for

WIP beginning (step1) --------------------------------------------1,200

Started (transferred) into production -----------------------2,000

Total units----------------------------------------------------------3,200

Units accounted for

completed & transferred out-----------------------------------2,800

WIP, sep 30----------------------------------------------------------4,00

Total units----------------------------------------------------------3,200

step2: compute equivalent unit of production

equivalent units

materials conversion

unit transferred out------------------------------------------2,800------------------------------2,800

WIP,sep 30

400x100%--------------------------------------------------4,00
400x50%------------------------------------------------------------------------------------------200

total equivalent units-------------------------------------3,200-------------------------------3,000

step3: compute unit production cost

Material cost

Direct material cost in beginning wIp-------------------------------------------450,000

direct materials added o production during period-------------------------800,000

total material cost------------------------------------------------------------------1,250,000

Unit material cost =total material cost/equivalent of material

=1,250,000
3,200
U.M.COST = 390.625=390.6

Conversion cost

Conversion cost in beginning WIP---------------------------------------180,000

Conversion cost added to production during period----------------250,000

Total conversion cost--------------------------------------------------430,000

Unit conversion cost =total conversion cost

equ.Units of conversion

=430,000
3000
U.C.C =143.333=143.3

total unit manufacturing cost = unit material + unit conversion cost

=390,625+143.3

T.U.C. COST =533.92 = 534


2) a) cost of units transferred out

Units completed &transferred out

Material conversion

unit transferred(finished goods)-----------------------------2,800-----------------------------2,800

cost per equivalent unit---------------------------------------390.625--------------------------143.3

cost of units transferred out--------------------------------1,093,750----------------------401,240

Total cost of unit transferred out =1,093,750+401,240

T.C.U. transferred out =1,494,990

b) Cost of ending WIP inventory

Material conversion

Eq. unit of ending wip--------------------------------------------------400----------------------200

cost per equ.unit---------------------------------------------------------390.6--------------------143.3

cost of ending WIP -----------------------------------------------------156,250-----------------28,660

Total cost of ending WIP =156,250+28,660

T.WIP =184,910

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