Question 3: Process Costing

Cannondale Bicycle Company manufactures various lines of bicycles. Because of the high volume of each type of product, the company employs a process cost system to determine unit costs. Bicycle parts are manufactured in the Moulding Department and transferred to the Assembly Department where they are assembled. After assembly, the bicycles are sent to the Packing Department. Cost and production figures for the Assembly Department are presented below for the month of June:

Production Data (in unit)

Beginning WIP Inventory (70% complete to material; 40% complete to conversion) 70,000

Started in June 460,000

Completed and transferred out 450,000

Ending WIP Inventory (75% complete to material; 25% complete to conversion) 80,000

Cost Data (in dollar)

Material Conversion

Beginning WIP Inventory $36,550 $13,500

Current period $391,850 $287,300

Required:

(a) Determine the cost per equivalent unit for the Assembly Department's direct materials and conversion costs, and the total unit cost for the current period, under the

i. Weighted-Average method

ii. FIFO method

(b) Assign total costs to units completed (and transferred out) to Packaging Department and to units in ending work in process in the Assembly Department.