Process Costing with Equivalent Units and Beginning Inventory
the Records

question 58

Essay

Process costing with equivalent units and beginning inventory
The records of Westminster Manufacturing Company for the month of May show the following costs in Department A:
$$\begin{array} { | l | r | } \hline \text { Beginning Inventory } & \$ 120,750 \\\hline \text { Direct Materials } & 405,000 \\\hline \text { Direct Labor } & 535,500 \\\hline \text { Overhead (150\% of Direct Labor Cost) } & 803,250 \\\hline \text { Total } & \$ 1,864,500 \\\hline & \\\hline\end{array}$$
The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units were completed and transferred out during May, and 20,000 units remained in the work in process inventory. The ending inventory was 80% complete as to direct materials and 40% complete as to labor and overhead. Compute the following:
(a) Direct materials cost per equivalent unit: $________________ (b) Equivalent full units of production for direct labor and overhead: ________________ (c) Total cost of 100,000 units completed: $_________________ (d) Total cost of 20,000 units in process at the end of the month: $_________________

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Definitions:

Controllable Costs

Expenses that a manager or business can influence or regulate, such as marketing costs or raw material purchases.

Fixed Costs

Business expenses that remain constant regardless of production volume, such as rent or salaries.

Total Overhead Variance

The difference between the actual overhead costs incurred and the standard or budgeted overhead costs anticipated for a particular period.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.