The Welding Department of Healthy Company has the following production and manufacturing cost data for February 2020. All materials are added at the beginning of the process. Manufacturing Costs Production Data
Beginning work in Beginning work in
process process 15,500 units, 1/10
complete
Materials $18,100 Units transferred out 54,800
Conversion costs 14,460 $32,560 Units started 51,200
Materials 218,685 Ending work in process 11,900 units, 1/5
complete
Labor 67,100
Overhead 58,531
Prepare a production cost report for the Welding Department for the month of February.

Welding Department

Production cost report for the  month of February

Inputs :

Beginning Work In Process :

Materials                                                  $18,100

Conversion costs                                   $14,460

Added During the year :

Materials                                              $218,685

Labor                                                      $67,100

Overhead                                               $58,531

Total                                                      $376,876

Outputs :

Completed and Transferred Out        $328,000

Units still in Process                               $48,076

Total                                                      $376,876

Explanation:

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

1. Materials

Ending Work In Process (11,900 × 100%)                                    11,900

Units Completed and Transferred Out (54,800 × 100%)         54,800

Equivalent Units of Production with Respect to Materials      66,700

2. Conversion Costs

Ending Work In Process (11,900 × 1/5)                                         2,380

Units Completed and Transferred Out (54,800 × 100%)         54,800

Equivalent Units of Production with Respect to Materials       57,180

Calculation of Cost per Equivalent Unit of Production with Respect to Materials and Conversion Costs.

Cost per Equivalent Unit = Total Cost ÷ Total Equivalent Units

1. Materials

Cost per Equivalent Unit = ($18,100 + $218,685) ÷  66,700

                                         = $3.55

2. Conversion Cost

Cost per Equivalent Unit = ($14,460 + $67,100 + $58,531) ÷  57,180

                                         = $2.45

3. Total Cost

Total Cost = Materials + Conversion Cost

                 = $3.55 + $2.45

                 = $6.00

Calculation of Total Cost of Units Completed and Transferred Out and Total Cost of Units still in Process.

Completed and Transferred Out = Units Completed and Transferred Out × Total Cost

                                                      = 54,800 × $6.00

                                                      = $328,000

Units still in Process = Material Cost + Conversion Cost

                                 =  $3.55 × 11,900 + $2.45 × 2,380

                                 = $48,076

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