Question

Mayhem Electronics makes game consoles in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work-in-Process Inventory on March 31. In mid-April, Mayhem Electronics started production on 99,000 game consoles. Of this number, 95,000 game consoles were assembled during April and transferred out to the Programming Department. The April 30 Work-in-Process Inventory in the Assembly Department was 45% of the way through the assembly process. Direct materials costing \(301,950 were placed in production in Assembly during April, direct labor of \)100,960 was assigned, and manufacturing overhead of $136,200 was allocated to that department.

Requirements

1. Prepare a production cost report for the Assembly Department for April. The

company uses the weighted-average method.

2. Prepare a T-account for Work-in-Process Inventory—Assembly to show its activity during April, including the April 30 balance.

Short answer

1. Production cost report

		Equivalent unit of production
UNITS	Physical units	Direct material	Conversion costs	Total
Units to account for:
Beginning WIP
Started in production	99,000
Total units to account for	99,000
Units accounted for:
Completed and transferred	95,000	95,000	95,000
Ending WIP	4,000	4,000	1,800
Total units accounted for	99,000	99,000	96,800
COSTS		Direct material	Conversion costs	Total costs
Costs to account for:
Beginning WIP
Cost added during the period		$301,950	$237,160	539,110
Total cost to account for		301,950	237,160	539,100
Divided by: total EUP		99,000	96,800
Cost per equivalent unit		$3.05	$2.45
Costs accounted for:
- Completed and transferred out		289,750 (95,000 x $3.05)	232,750 (95,000x$2.45)	522,500
- Ending WIP		12,200 (4,000x $3.05)	4,410 (1,800x$2.45)	16,610
Total costs accounted for		$301,950	$237,160	539,110

2. The Ending balance of the WIP inventory account for the assembly department is $16,610.

Step-by-step solution

Step-by-Step Solution:Step 1: Production Cost Report

A production cost report is a report of a manufacturing company that involves various manufacturing processes which shows the comprehensive costs of a product.

Equivalent unit of production for conversion cost

$$\begin{gathered} \mathbf{Equivalent}\mathbf{}\mathbf{unit}\mathbf{}\mathbf{of}\mathbf{}\mathbf{production}\mathbf{=}\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{4}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{45}\mathbf{\%} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{1}\mathbf{,}\mathbf{800} \end{gathered}$$

T-account for work-in-process inventory-assembly

Particulars	Amount ($)	Particulars	Amount ($)
Beginning WIP		WIP-programming department	522,500
Direct material	301,950
Direct labor	100,960
Manufacturing overhead	136,200	Ending WIP	16,610