Question

Elliott Company produces large quantities of a standardized product. The following information is available for its production activities for March.

Units		Cost
Beginning work-in-process inventory	2,000	Beginning work-in-process inventory
Started	20,000	Direct material	\(2,500
Ending work-in-process inventory	5,000	Conversion	6,360	\)8,860
		Direct material added		168,000
Status of ending work-in-process inventory		Direct labor added		199,850
Material-percent complete	100%	Overhead applied (140% of direct labor)		279,790
Conversion – percent complete	35%	Total cost to account for		\(656,500
		Ending work-in-process inventory		\)84,110

Prepare a process cost summary report for this company showing costs charged to production, unit cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation. Use the weighted-average method.

Short answer

Cost per equivalent unit:

Material:$7.75

Conversion:$25.92

Step-by-step solution

Definition of Process Cost Summary

A report shows the cost incurred by the department, units produced by the department, and the cost allocated to each unit produced and prepared by the management accountant is known as the process cost summary.

Process cost summary report

1. Total cost to account for: $656,500.
2. Unit information

Units to account for:		Units accounted for:
Beginning work-in-process	2,000	Completed and transferred out	17,000
Unit started this period	20,000	Ending work-in-process	5,000
Total units to account for	22,000	Total units accounted for	22,000

Equivalent unit of production

	Direct material	Conversion
Units completed and transferred out	17,000	17,000
Units of ending work-in-process
Direct material (100% of 5,000)	5,000
Conversion (35% of 5,000)		1,750
Equivalent units of production	22,000	18,750

Cost per equivalent units of production

	Direct material	Conversion
Cost of beginning work-in-process	$2,500	$6,360
Cost incurred this period	168,000	479,640
Total cost	$170,500	$486,000
Equivalent units of production	22,000	18,750
Cost per equivalent unit	$7.75	$25.92

Working note:

Conversion cost incurred during this period

$\begin{array}{c}\mathbf{Conversion}\mathbf{}\mathbf{}\mathbf{cost}\mathbf{=}\mathbf{(}\mathbf{\$}\mathbf{199}\mathbf{,}\mathbf{850}\mathbf{+}\mathbf{\$}\mathbf{279}\mathbf{,}\mathbf{790}\mathbf{)}\\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{\$}\mathbf{479}\mathbf{,}\mathbf{640}\end{array}$

3.Cost assignment and reconciliation

Cost transferred out (Cost of goods manufactured):
Direct material$\mathbf{(}\mathbf{17}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{\$}\mathbf{7}\mathbf{.}\mathbf{75}\mathbf{)}$	$131,750
Conversion $\mathbf{(}\mathbf{17}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{\$}\mathbf{25}\mathbf{.}\mathbf{92}\mathbf{)}$		$440,640
Cost of ending work-in-process:
Direct material (5,000 units @ $7.75)	38,750
Conversion (1,750 units @25.92)		$45,360
Total cost accounted for	$170,500	$486,000