Bell Computers, Ltd., located in Liverpool, England, assembles a standardized personal computer from parts it purchases from various suppliers. The production process consists of several steps, starting with assembly of the "mother" circuit board, which contains the central processing unit. This assembly takes place in the CPU Assembly Department. The company recently hired a new accountant who prepared the following report for the department for May using the weighted-average method:
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| Units to be accounted for: |
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Work in process, May 1: materials 90%
complete; conversion 80% complete |
12,700 |
| Started into production |
31,600 |
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| Total units |
44,300 |
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| Units accounted for as follows: |
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| Transferred to next department |
40,300 |
Work in process, May 31: materials 75%
complete; conversion 50% complete |
4,000 |
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| Total units |
44,300 |
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| Cost Reconciliation |
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| Cost to be accounted for: |
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| Work in process, May 1 |
£ |
45,339 |
| Cost added in the department |
|
125,838 |
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|
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| Total cost to be accounted for |
£ |
171,177 |
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| Cost accounted for as follows: |
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| Work in process, May 31 |
£ |
10,380 |
| Transferred to next department |
|
160,797 |
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|
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| Total cost accounted for |
£ |
171,177 |
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The company's management would like some additional information about May's operation in the CPU Assembly Department. (The currency in England is the pound, which is denoted by the symbol £.)
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| 1. |
How many units were started and completed during May? |
| Units started and completed during May |
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| 2. |
What were the equivalent units of production for May for materials and conversion costs? |
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Materials |
Conversion |
| Equivalent units of production |
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|
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| 3. |
What were the costs per equivalent unit for May? The following additional data are available concerning the department's costs (Round your answers to 2 decimal places):
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|
Materials |
Conversion |
Total |
| Work in process, May 1 |
£ |
27,940 |
£ |
17,399 |
£ |
45,339 |
| Costs added during May |
£ |
75,980 |
£ |
49,858 |
£ |
125,838 |
|
|
Materials |
Conversion |
| Cost per equivalent unit |
£ |
£ |
|
| 4. |
Calculate the material cost and the conversion cost of the ending work in process. (Round your cost per equivalent unit calculation to 2 decimal places and final answers to the nearest whole dollar amount.)
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Materials |
Conversion |
Total |
| Ending work in process inventory: |
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|
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| Equivalent units of production |
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|
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| Cost per equivalent unit |
£ |
£ |
|
| Cost of ending work in process inventory |
£ |
£ |
£ |
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| 5. |
The new manager of the CPU Assembly Department was asked to estimate the incremental cost of processing an additional 1,000 units through the department. He took the unit cost for an equivalent whole unit you computed in (3) above and multiplied this figure by 1,000. Will this method yield a valid estimate of incremental cost?
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