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Rivera Company has several processing departments. Costs charged to the Assembly Department for November 2020 totaled $2,283,744 as follows.
Work in process, November 1 Materials $78,600 Conversion costs 48,700 $127,300 Materials added 1,592,280 Labor 225,100 Overhead 339,064 Production records show that 35,200 units were in beginning work in process 30% complete as to conversion costs, 661,000 units were started into production, and 25,400 units were in ending work in process 40% complete as to conversion costs. Materials are entered at the beginning of each process.
(a) Determine the equivalent units of production and the unit production costs for the Assembly Department.
(Round unit costs to 2 decimal places, e.g. 2.25.)
Materials Conversion Costs
Equivalent Units
Cost per unit $ $
(b) Determine the assignment of costs to goods transferred out and in process.
(c) Prepare a production cost report for the assembly dept.

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Answer:

a.

Equivalent Units : Materials = 696,200 units and  Conversion Costs = 680,960 units

Cost per unit : Materials = $2.40 and  Conversion Costs = $0.90

b.

goods transferred out =  $2,213,640

goods in process = $70,104

c.

Production cost report for the assembly department

Inputs :

Opening Balance                                     $127,300

Costs added during the year :

Materials                                                $1,592,280

Labor                                                        $225,100

Overhead                                               $ 339,064

Total Costs                                            $2,283,744

Outputs :

Completed and Transferred Out         $2,213,640

Ending Work In Process                            $70,104

Total Costs                                           $2,283,744

Explanation:

First, calculated the number of units completed and transferred to finished goods.

Number of units completed and transferred = Beginning Inventory Units + Units Started during the period - Ending Inventory Units

Number of units completed and transferred = 35,200 units + 661,000 units -  25,400 units

                                                                         = 670,800 units

Calculation of Equivalent Units of Production with Respect to Raw Materials and Conversion Costs.

1. Materials

Ending Work In Process (25,400 × 100%)                                       =   25,400

Completed and Transferred (670,800 × 100%)                              = 670,800

Equivalent Units of Production with Respect to Raw Materials     = 696,200

2. Conversion Costs

Ending Work In Process (25,400 × 40%)                                         =    10,160

Completed and Transferred (670,800 × 100%)                              = 670,800

Equivalent Units of Production in Conversion Costs                     = 680,960

Calculation of Total Unit Cost

Unit Cost = Total Costs ÷ Total Equivalent Units

1. Materials

Unit Cost = ($78,600 + $1,592,280) ÷ 696,200

                = $2.40

2. Conversion Costs

Unit Cost = ($48,700 + $225,100 + $339,064 ) ÷ 680,960

                = $0.90

3. Total Unit Cost

Total Unit Cost = Materials + Conversion Costs

                         = $2.40 + $0.90

                         = $3.30

Calculation of costs assigned to goods transferred out and in process.

Goods transferred out = Units completed and transferred × total unit cost

                                      = 670,800 × $3.30

                                      = $2,213,640

Units in Process = Material Costs + Conversion Cost

                            = (25,400 × $2.40) + (10,160 × $0.90)

                            = $70,104

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