Unit 4 Process Costing

Reno Co has several processing departments. Costs charged to Department A for January totaled $265,500 WIP 1/1

Materials $13,500

Conversion costs 8000 $21,500

Materials added during the month 75,000

Labor added during the month 104,750

Overhead added during the month 64,250

Records indicated that 3,500 units were in beginning WIP 30% completed as to conversion costs. 17,500 units were started into production and 4,000 units were in ending WIP 60% complete as to conversion costs.Materials are entered at the beginning of each process.

Beginning Units 3,500

Started Units 17,500

Ending Units 4,500

Materials 100% complete

Conversion 70% complete

1. Determine the EUP (equivalent units of production)

2.Determine the assignment of costs to goods transferred out and in process

WIP Dept 1 Debits Credits

Beg Inventory- Materials 13,500

Amount transferred to Dept 2

Beginning Conversion costs 8,000

Direct material 75,000

Direct Labor 104,750

Overhead 64,250

265,500

1. Calculate the This month's conversion costs:

1.RECAP COSTS Materials conversion total

Beginning inventory (last month)

This month

Total

2.Account for units - Determine the Physical Flow

Beginning WIP

Completed and transferred out

Units started

Ending WIP

To account for

To account for

3.Calculate Equivalent Units

Units % material EUP Materials % Conversion EUP Conversion

units completed and transferred out

units of ending WIP

equivalent units

4.Determine Unit Costs Dir Materials Conversion Costs

Beg inventory

Costs added this month

Total EUP

Total Cost

Units

Cost per unit Total Cost per Unit

5.Allocate costs

Assignment of costs Units Per Unit Total

Finished

Journal Entry to transfer Work in Process Costs from Dept A to Dept B

Debit Credit

#1

#2

6. Determine Cost of ending WIP inventory

EUP cost per EUP Total cost

Direct material

Conversion Costs

total cost of ending work is process

7 Concept Check: WIP Dept 1

Debits Credits

Beg Inventory- Materials 13,500

Beginning Conversion costs 8,000

Direct material 75,000

Direct Labor 104,750

Overhead 64,250

Ending balance