Problem 6: Basic Flows And Equivalent Units For Bowman Compa

Problem 6 46basic Flows Equivalent Unitsbowman Company Produces An Ar

Problem 6-46 Basic Flows, Equivalent Units Bowman Company produces an arthritis medication that passes through two departments: Mixing and Tableting. Bowman uses the weighted average method. Data for February for Mixing is as follows: BWIP was zero; EWIP had 7,200 units, 50 percent complete; and 84,000 units were started. Tableting's data for February is as follows: BWIP was 4,800 units, 20 percent complete; and 2,400 units were in EWIP, 40 percent complete. 1. For Mixing, calculate the (a) number of units transferred to Tableting, and (b) equivalent units of production. a. Units transferred to tableting [removed] units b. Equivalent units of production [removed] units 2. For Tableting, calculate the number of units transferred out to Finished Goods. [removed] units 3. Suppose that the units in the mixing department are measured in ounces, while the units in Tableting are measured in bottles of 100 tablets, with a total weight of eight ounces (excluding the bottle). Decide how you would treat units that are measured differently. The input in the box below will not be graded, but may be reviewed and considered by your instructor. Now, repeat Requirement 2 using this approach. Units transferred out [removed] units

Paper For Above instruction

The analysis of production and equivalent units in manufacturing processes provides valuable insights into the efficiency and progress of production. The scenario involving Bowman Company’s arthritis medication production through two departments—Mixing and Tableting—illustrates the application of process costing methods, particularly the weighted average approach. This paper aims to determine the transferred units and equivalent units in each department, interpret the implications of differing measurement units, and assess the impact of measurement conversion techniques on production reporting.

Introduction

In process costing, understanding the flow of units and their completeness levels is crucial for accurate cost allocation and financial reporting. Bowman Company's production process involves two consecutive departments, each with specific inventory levels at the beginning and end of February, and different measures of units—weight in ounces for Mixing and tablet count in bottles for Tableting. This analysis will calculate the units transferred between departments and the equivalent units of production, considering the weighted average method. Additionally, the paper explores how differing measurement units influence the interpretation and reporting of production data.

Units transferred from Mixing to Tableting

In the Mixing department, the units transferred are equal to the units started plus the beginning work-in-process inventory (BWIP), minus the ending work-in-process (EWIP). Since BWIP was zero, the transferred units are computed as:

• Units transferred = Units started + BWIP - EWIP

Substituting the values:

• Units transferred = 84,000 + 0 - 7,200 = 76,800 units

This figure represents the units that move into the Tableting department for further processing.

Equivalent units of production in Mixing

Using the weighted average method, equivalent units consider both completed units and those still in process, adjusted for their degree of completion. The calculation involves:

• Units completed and transferred out: 76,800 units
• EWIP units: 7,200 units at 50% completion

Therefore, the equivalent units for Mixing are:

• Units completed: 76,800 units
• EWIP equivalent units: 7,200 units × 50% = 3,600 units

Total equivalent units in Mixing = 76,800 + 3,600 = 80,400 units.

Units transferred to Finished Goods from Tableting

In the Tableting department, the units transferred out to finished goods are the units completed during February, calculated by adding beginning inventory and units started, minus ending inventory:

• Units transferred out = Beginning BWIP + Units started - EWIP

Given:

• Beginning BWIP = 4,800 units (20% complete)
• Units started: 84,000 units in Mixing but considered in transfer
• Units in EWIP: 2,400 units at 40% complete

However, since the starting point in Tableting is the transferred units, the units transferred to Finished Goods are:

• Units transferred out = Units transferred from Mixing (76,800 units)

This aligns with the flow, assuming that all units transferred to Tableting are subsequently finished and shipped.

Adjusting for Different Measurement Units

The unique measures—ounces in Mixing and bottles of tablets in Tableting—pose a challenge for uniform analysis. To treat these units consistently, we convert measurements into a common basis. Since the total weight of tablets (eight ounces) per bottle provides a standard unit, we regard each bottle as an equivalent weight share of the total batch. This standardization allows for accurate comparisons and cost allocations.

Applying this approach to the units transferred out from Tableting, we consider the weight equivalence. If each bottle is eight ounces, the units transferred can be expressed in ounces or counts of bottles, facilitating consistent recording and costing across departments.

Repeating the revenue recognition with this method confirms the influence of measurement units on production planning and cost management. It emphasizes the importance of standardized measurement systems for accurate data analysis, financial reporting, and process improvement.

Conclusion

Analyzing Bowman Company’s production process through process costing highlights the significance of accurate unit flow calculations and the impact of measurement units on data interpretation. The consistent application of the weighted average method enables the determination of transferred units and equivalent units, providing insightful information for cost control and profitability assessment. Addressing measurement differences through standardization ensures reliable financial reporting and supports manufacturer decision-making in complex production environments.

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