Question
Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 20%.
Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 20%. The companys controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect.
Units | Costs | |||||
Work in process, December 31 (materials 100% complete; conversion 60% complete) | 38,000 | $ | 73,000 | |||
Finished goods, December 31 | 43,000 | $ | 126,500 | |||
There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department.
A review of the companys inventory and cost records shows the following:
Costs | |||||||||
Units | Materials | Conversion | |||||||
Work in process, beginning of year (materials 100% complete; conversion 50% complete) | 33,000 | $ | 35,000 | $ | 61,000 | ||||
Started into production | 613,000 | ||||||||
Costs added during the year | $ | 763,000 | $ | 2,130,000 | |||||
Units completed during the year | 810,000 | ||||||||
Required:
1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year. (Round your "Cost per equivalent unit" answers to 2 decimal places.)
Materials | Conversion | |
Equivalent units of production | ||
Cost per equivalent unit |
2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories
Materials | Conversion | Totals $ | |
Cost of ending work in process inventroy | |||
Cost of finished goods inventory |
3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31. (Round intermediate calculations to 2 decimal places.)
4. Journal Entry
Record the entry to adjust the work in process and finished goods inventories
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