Tracker Sports is a manufacturer of sportswear. Tracker produces its products in two departments.The information for the current month for Department #2 is as follows: Beginning work-in-process 20,000unitsUnits transferred in from Department #1 40,000unitsUnits completed 50,000unitsEnding work-in-process 10,000unitsBeginning WIP transferred in costs$50,000 Beginning WIP direct materials$12,000 Beginning WIP direct labor$3,200 Beginning WIP overhead$1,600 Costs transferred in from Department #1$100,000 Direct material added during month$60,000 Direct labor during month$20,000 Manufacturing overhead applied ??? Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added when the process is 25% complete. Manufacturing overhead is
applied at a rate equal to 50 percent of direct labor. Ending WIP was 60 percent complete. Tracker Sports uses first-in, first-out (FIFO) costing.Required:(HINT: use 4 decimal places in your calculations)a. Compute the equivalent units of production for each input.b. Compute the cost per equivalent unit.c. Compute the cost transferred out to finished goods.d. Compute the ending work-in-process inventory balance.
What will be an ideal response?
Overhead applied = 50% × $20,000 = $10,000; Started & completed: 40,000 ? 10,000 = 30,000.
(a)
TI EUP: (0% × 20,000) + 30,000 + (100% × 10,000) = 40,000.
Materials EUP: (0% × 20,000) + 30,000 + (100% × 10,000) = 40,000.
Conversion EUP: (50% × 20,000) + 30,000 + (60% × 10,000) = 46,000.
(b)
TI: $100,000/40,000 = $2.5000.
Materials: $60,000/40,000 = $1.5000; Conversion: ($20,000 + $10,000) / 46,000 = $0.6522.
(c)
| BWIP | $ | 66,800 | |
| Conversion to complete: (20,000 × 50%) × $0.6522 | 6,522 | ||
| $ | 73,322 | ||
| Started and completed: | |||
| 30,000 × ($2.50 + $1.50 + $0.6522) | 139,566 | ||
| Total | $ | 212,888 | |
| EWIP: | |||
| Transferred-in: 10,000 × $2.50 = | $ | 25,000 | |
| Materials: 10,000 × $1.50 = | 15,000 | ||
| Conversion: (10,000 x 60%) × $0.6522 | 3,913 | ||
| Total EWIP | $ | 43,913 | |
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