Soution of assignment?

ASSIGNMENT WORK:


Bell Computers, LTD., located in Liverpool, England, assembles a standardized personal


computer from parts it purchases from various suppliers. The production process consists


of several steps, starting with assembly of the “mother” circuit board, which contains the


central processing unit. This assembly takes place in the CPU Assembly Department. The


company recently hired a new accountant who prepared the following partial production


report for the department for January using the weighted-average method:


Quantity Schedule:


Units to be accounted for:


Work in process, January 01 10,000


(Materials 90% complete; Conversion 80% complete)


Started into production 58,000


Total units 68,000


Units accounted for as follows:


Completed and transferred out 60,000


Work in Process, January 31 8,000


(Materials 75% complete; Conversion 50% complete)


Total units 68,000


Total Cost:


Cost to be accounted for:


Work in Process, January 01 £ 26,800


Cost added in the department 175,600


Total cost £ 202,400


Cost Reconciliation:


Cost accounted for as follows:


Completed and transferred out £ 186,000


Work in Process, January 31 16,400


Total cost £ 202,400


The company’s management would like some additional information about January’s


operation in the CPU Assembly Department. (The currency in England is the pound,


which is denoted by the symbol “£”.)


Required:


1. How many units were stared and completed during January?


2. What were the equivalent units for January for material and conversion costs?


3. What were the costs per equivalent unit for January? The following additional


data are available concerning the department’s cost:


Particular Total


£


Material


£


Conversion


£


Work in Process, January 01 26,800 18,000 8,800


Cost added during January 175,600 114,000 61,600


4. Verify the accountant’s ending work in process inventory figure (£16,400) given


in the report.


5. What criticism can be made of the unit costs that have been computed using


weighted –Average Method by the company and which method is superior for


computing unit cost under process costing based on your criticism|||. How many units were stared and completed during January?


Ans: 50,000





Because the opening work in process was almost completed when the January started so it is assumed that the 60,000 units that are completed and transferred include 10,000 units of opening work in process. And as given in question that there are 8,000 units in ending work in process. So in January 50,000 units are completed that were started in January.





2. What were the equivalent units for January for material and conversion costs?





Equivalent production:


Direct material = 60,000 + (8,000 * 75%) = 66,000 units


Conversion cost=60,000 + (8,000 * 50%) = 64,000 units





3. What were the costs per equivalent unit for January?


Unit cost





Direct material = Rs. 132,000 / 66,000 units = Rs. 2


Conversion Cost = Rs. 70,400 / 64,000 units = Rs.1.1


Total cost per unit = Rs. 3.1




















4. Verify the accountant’s ending work in process inventory figure (£16,400) given


in the report





work in process ending invertory:





material = 8,000*75%*2 = 12,000


conversion = 8,000*50%*1.1 = 4400


total ending inventory = 16,400