OBJECTIVES:

In process costing environment

Calculate equivalent units of production

Determine cost per equivalent unit

Allocate department cost between goods completed and transferred and goods in ending inventory

Rovex Company uses a process costing system and manufactures a single product. Activity for July has just been completed. Materials are added during processing in the first department. Although overhead is applied on the basis of direct labor, labor and manufacturing overhead cost are determined separately due to the fact that manufacturing overhead represents a significant element of product cost. A partially completed production report for July using the weighted average method for the first processing department is on the template for this assignment.

REQUIRED:

Record your answers to the following in the appropriate boxes on the template provided. Your answers to #1-3 should contain formulas that include cell references only.

Calculate July equivalent units of production for Department #1 for materials, labor and overhead.

Calculate July cost per equivalent unit of production for Department #1 for materials, labor and overhead.

Allocate July cost of Department #1 to units completed and transferred and units in ending inventory.

Prepare the journal entry required to record the transfer of completed units from Department #1.

Units to be accounted for:
Work in process, July 1			10000
Materials	100%
Labor	80%
Overhead	80%
Units started into production			100000
Total units to account for			110000
1. Calculate EUP
					EUP
					Materials		Labor		Overhead
Transferred to Department #2
Units	100%		95000
Work in process, July 31			15000
Materials	60%
Labor	20%
Overhead	20%
Total EUP
2. Determine Cost/EUP			Total Cost		Materials		Labor		Overhead
Work in process, July 1			$8,700		$1,500		$1,800		$5,400
Costs added by department			245,300		154,500		22,700		68,100
Total cost			$254,000		$156,000		$24,500		$73,500
Cost/EUP
3. Allocate total department cost
Units completed and transferred:
Materials
Labor
Overhead
Total cost transferred
Ending inventory:
Materials
Labor
Overhead
Total cost of ending inventory
4. Journal entry