Reference no: EM13962973
Computing equivalent units and assigning costs to completed units and ending WIP inventory; two materials, added at different points; no beginning inventory or cost transferred in
Root's Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small hits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. March data for the Preparation
Department are as follows (in millions):
|
Sheets
|
|
Costs
|
|
|
Beginning work in process inventory
|
0 sheets
|
Beginning work in process inventory
|
$ 0
|
|
Started production
|
3,300 sheets
|
Costs adding during March:
|
|
|
Completed and transferred out to
|
|
Wood
|
2,600
|
|
Compression in March
|
1,900 sheets
|
Adhesives
|
1,365
|
|
|
|
Direct labor
|
640
|
|
Ending work in process inventory (45% of the way through the preparation process)
|
1,400 sheets
|
Manufacturing overhead
|
2,445
|
|
|
|
Total costs
|
$ 7,050
|
Requirements
1. Draw a time line for the Preparation Department.
2. Use the time line to help you compute the equivalent. (Hint: Each direct material added at a different point in the production process requires its own equivalent- unit computation.)
3. Compute the total costs of the units (sheets)
a. Completed and transferred out to the Compression Department.
b. In the Preparation Department's ending work in process inventory.
4. Prepare the journal entry to record the cost of the sheets completed and transferred out to the Compression Department.
5. Post the journal entries to the Work in process inventory Preparation T-account. What is the ending balance?