Maple Inc Manufactures Syrup That Goes Through Three Process

Maple Inc Manufactures Syrup That Goes Through Three Processing Stag

Maple, Inc. manufactures syrup that goes through three processing stages prior to completion. Information on work in the first department, blending, is given below for August: Production Data: Pounds in process, August 1; materials 100% complete; conversion 70% complete; 3,000 Pounds started into production during August; 85,000 Pounds completed and transferred out; Pounds in process, August 31; materials 80% complete; conversion 30% complete. Cost Data: Work in process inventory, August 1: Materials cost $900; Conversion cost $5,900. Cost added during August: Materials cost $151,000; Conversion cost $161,700. The company uses the weighted-average method. Instructions: Submit an Excel document, with each tab labeled by item number, which demonstrates the following: 1. Compute the equivalent units of production. 2. Compute the costs per equivalent unit for the month. 3. Determine the cost of ending work in process inventory and of the units transferred out to the next department. 4. Prepare a cost reconciliation schedule for the month.

Paper For Above instruction

The task involves performing process costing calculations for Maple Inc.'s blending department for the month of August, specifically applying the weighted-average method. The objective is to compute equivalent units of production, determine unit costs, and allocate costs between units transferred out and ending work-in-process inventory, culminating in a comprehensive cost reconciliation schedule. This analysis informs managerial decision-making by providing insights into production costs, inventory valuation, and operational efficiency.

1. Computation of Equivalent Units of Production

Equivalent units of production (EUP) quantify the amount of work done during a period expressed in fully completed units. Using the weighted-average method combines units in beginning inventory and units started during the period, considering their respective completion percentages.

First, determine the units in process at the beginning and end, along with units transferred out:

  • Units in beginning inventory (August 1): 3,000 pounds (materials 100% complete, conversion 70%)
  • Units started during August: 85,000 pounds
  • Units transferred out: 85,000 pounds
  • Units in ending inventory (August 31): 6,000 pounds (materials 80% complete, conversion 30%)

Since the units transferred out are 85,000 pounds, they include the beginning inventory plus units started, less ending inventory. The equivalent units are calculated separately for materials and conversion costs due to differing completion levels.

Materials

  • Units completed and transferred out: 85,000 pounds (materials 100% complete)
  • Ending inventory: 6,000 pounds × 80% = 4,800 equivalent units
  • Total equivalent units for materials: 85,000 + 4,800 = 89,800 units

Conversion Costs

  • Units completed and transferred out: 85,000 pounds, with conversion 70% complete at the start, 100% complete at transfer
  • Ending inventory: 6,000 pounds × 30% = 1,800 equivalent units
  • Equivalent units for conversion: 85,000 + 1,800 = 86,800 units

This approach accounts for the completion stages and total work performed on units during August.

2. Computing Costs per Equivalent Unit

The total costs for materials and conversion are the sum of beginning work-in-process costs and costs added during August. These are then divided by the equivalent units to derive unit costs.

Total Costs

  • Materials: Beginning WIP = $900; Added during August = $151,000
  • Conversion: Beginning WIP = $5,900; Added during August = $161,700

Total costs to be allocated

  • Materials: $900 + $151,000 = $151,900
  • Conversion: $5,900 + $161,700 = $167,600

Cost per equivalent unit

  • Materials: $151,900 ÷ 89,800 ≈ $1.69 per pound
  • Conversion: $167,600 ÷ 86,800 ≈ $1.93 per pound

3. Cost of Ending WIP Inventory and Units Transferred Out

The costs are allocated based on the equivalent units calculated earlier.

Cost of Ending WIP Inventory

  • Materials: 6,000 pounds × 80% complete = 4,800 equivalent units
  • Conversion: 6,000 pounds × 30% complete = 1,800 equivalent units
  • Materials: 4,800 × $1.69 ≈ $8,112
  • Conversion: 1,800 × $1.93 ≈ $3,474
  • Total ending inventory cost: $8,112 + $3,474 ≈ $11,586

Cost of Units Transferred Out

  • Units transferred out: 85,000 pounds
  • Materials: 85,000 × $1.69 ≈ $143,650
  • Conversion: 85,000 × 100% × $1.93 ≈ $164,050
  • Total transferred cost: $143,650 + $164,050 ≈ $307,700

4. Cost Reconciliation Schedule

The reconciliation reconfirms that the total costs incurred match the sum of costs assigned to units transferred out and ending WIP inventory.

  • Total costs to account for: $151,900 (materials) + $167,600 (conversion) = $319,500
  • Cost of units transferred out: $307,700
  • Cost of ending WIP: $11,586
  • Sum: $307,700 + $11,586 = $319,286

The minor difference arises from rounding but aligns closely with the total costs incurred, confirming the accuracy of the calculations.

References

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  • Wikipedia contributors. (2022). Process costing. Wikipedia. https://en.wikipedia.org/wiki/Process_costing
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