Acct552 Week 3 Homework Assignment Please Complete The Below

Acct552week 3 Homework Assignmentplease Complete The Below Problems An

The assignment involves processing data related to Resty Company's manufacturing departments, specifically focusing on process costing in the Mixing Department for December 2014. The company produces a product passing through two departments: Mixing and Packaging. Materials are added at the start of the process, and conversion costs are incurred evenly during the period. After finishing in the Mixing Department, products are transferred immediately to Packaging. The task requires calculating equivalent units, cost per equivalent unit, total costs for ending work-in-process inventory and transferred units, and preparing a cost reconciliation report. The company uses the weighted-average method for process costing. Relevant data includes beginning work-in-process inventory, units started and completed during December, ending work-in-process units, and associated costs and percentage completion levels for materials and conversion costs.

Paper For Above instruction

The process costing analysis for Resty's Mixing Department in December 2014 presents a comprehensive view of the production and cost allocation processes essential for financial and managerial accounting. This analysis encompasses the calculation of equivalent units, determination of unit cost, assessment of inventory values, and the formulation of a cost reconciliation report essential for accurate financial reporting and cost control.

Introduction

Resty Company’s manufacturing process involves two key stages: the Mixing Department and the Packaging Department. The focus of this analysis is the Mixing Department for December 2014, where the costs associated with beginning inventory, current period activities, and the eventual transfer of completed units are examined. Utilizing the weighted-average method simplifies the process by averaging costs across all units, regardless of whether they are from beginning inventory or started during the current period. This approach offers a comprehensive view of production costs and supports effective managerial decision-making.

Calculation of Equivalent Units

Equivalent units provide a basis for assigning costs in process costing. For the Mixing Department, the computations involve determining the complete units associated with the work done during December, considering the beginning inventory, units started and completed, and ending inventory.

Given data:

• Beginning Work in Process (WIP): 50,000 units, 30% complete for conversion
• Units started: 380,000 units
• Units completed and transferred out: 405,000 units
• Ending WIP: 25,000 units, 20% complete for both materials and conversion

Under the weighted-average method, the equivalent units for materials and conversion are calculated as follows:

• Units transferred out are 405,000 units, which are 100% complete for materials (since materials are added at the beginning) and vary for conversion based on percentage completion.
• Ending WIP consists of 25,000 units, 100% complete for materials and 20% for conversion.

Calculations:

Equivalent Units for Materials

• Units transferred out: 405,000 (all 100% complete for materials)
• Ending WIP: 25,000 units × 100% = 25,000 units
• Total equivalent units for materials: 405,000 + 25,000 = 430,000 units

Equivalent Units for Conversion Costs

• Units transferred out: 405,000 (considered 100% complete for conversion since the units are transferred)
• Ending WIP: 25,000 units × 20% = 5,000 units
• Total equivalent units for conversion costs: 405,000 + 5,000 = 410,000 units

Computing Costs Per Equivalent Unit

The total costs incurred during December for materials and conversion are given:

• Materials: $49,540 (beginning inventory) + $472,300 (added during December) = $521,840
• Conversion: $19,400 (beginning inventory) + $301,200 (added during December) = $320,600

Cost per equivalent unit is calculated by dividing total costs by equivalent units:

Materials Cost per Unit

$521,840 ÷ 430,000 = approximately $1.21 per unit

Conversion Cost per Unit

$320,600 ÷ 410,000 = approximately $0.783 per unit

Cost of Ending WIP Inventory and Units Transferred Out

The ending inventory costs are calculated by multiplying the equivalent units in ending WIP by the respective costs per unit:

• Materials: 25,000 units × $1.21 = $30,250
• Conversion: 5,000 units × $0.783 = $3,915
• Total ending WIP cost = $34,165

To determine the cost of units transferred out, multiply the units transferred out by the combined cost per unit (materials + conversion):

Per unit total cost: $1.21 + $0.783 = $1.993

Units transferred out: 405,000 units

Cost of units transferred out: 405,000 × $1.993 = approximately $807,465

Cost Reconciliation Report

The cost reconciliation summarizes the costs to account for and confirms the accuracy of the process costing calculations.

• Costs in beginning WIP: $49,540 (materials) + $19,400 (conversion) = $68,940
• Costs added during December: $472,300 (materials) + $301,200 (conversion) = $773,500
• Total costs to account for: $68,940 + $773,500 = $842,440
• Costs assigned to units transferred out: $807,465
• Costs in ending WIP: $34,165

Reconciling total costs:

• Total costs assigned = $807,465 + $34,165 = $841,630
• The slight discrepancy with total costs ($842,440 vs. $841,630) is due to rounding.

Therefore, the process costing analysis confirms that the total costs are properly allocated between transferred units and ending inventory, supporting accurate financial reporting and cost management.

Conclusion

The process costing approach applied to Resty Company's December 2014 data effectively details the flow of costs through the Mixing Department. Calculating the equivalent units using the weighted-average method simplifies cost allocation by blending beginning inventory and current period costs. The resulting unit costs facilitate precise valuation of ending inventory and transferred units, thereby ensuring reliable financial data. The cost reconciliation further affirms the accuracy of the process, underscoring the importance of methodical cost tracking in manufacturing operations. Such analyses are essential tools for management to control costs, set pricing, and evaluate operational efficiency in a manufacturing environment.

References

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