All of it is correct, need #2..
MacLean Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at MacLean has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department's process. MacLean uses the weighted-average method of process costing. Consider the following data for the assembly department in April 2017: - Requirements Requirements 1. Summarize total assembly department costs for April 2017, and assign them to units completed (and transferred out) and to units in ending work in process. 2. What issues should a manager focus on when reviewing the equivalent units calculation? - Data table Physical Units Direct Conversion (Frames) Materials Costs Work in process, April 18 105 $1,680 $924 Started during April 2017 525 Completed during April 2017 480 Work in process, April 306 150 Total costs added during April 2017 $17,850 $9,966 a Degree of completion: direct materials, 100%; conversion costs, 40%. "Degree of completion: direct materials, 100%; conversion costs, 10%. Requirement 1. Summarize total assembly department costs for April 2017, and assign total costs to units completed (and transferred out) and to units in ending work in process. Begin by calculating the physical units and equivalent units. Equivalent Units Physical Direct Conversion Flow of Production Units Materials Costs Work in process, beginning 105 525 Started during current period 630 To account for Completed and transferred out during current period 480 480 480 150 Work in process, ending 150 15 630 Accounted for 630 495 Equivalent units of work done to date Now summarize the total costs to account for. Total Direct Conversion Production Costs Materials Costs Work in process, beginning 2,604 $ 1,680 $ 924 Costs added in current period 27,816 17,850 9,966 30,420 $ 19,530 $ 10,890 Total costs to account for Next calculate cost per equivalent unit for direct materials and conversion costs. Direct Conversion Materials Costs Costs incurred to date 19,530 $ 10,890 630 495 Divide by Equivalent units of work done to date $ 31. $ 22 Cost per equivalent unit Finally assign total costs to units completed (and transferred out) and to units in ending work in process. Total Direct Conversion Production Costs Materials Costs Completed and transferred out 25,440 $ 14,880 $ 10,560 4,980 Work in process, ending 4,650 330 $ 30,420 $ 19,530 $ 10,890 Total costs accounted for Requirement 2. What issues should a manager focus on when reviewing the equivalent units calculation? To show better performance, a department supervisor might report a higher degree of completion resulting in overstated cost per equivalent unit and overstated operating income. In other words, estimates of degree of completion can help increase the produciton efficiency resulsting in less waste. To encourage increased productivity, managers should ask supervisors specific questions about the process they followed. Top management should always emphasize obtaining the correct answer, regardless of how it affects reported performance. This emphasis drives ethical actions throughout the organization
