Bell Computers, Ltd., located in Liverpool, England, gathers a standardized personal computer from parts it purchases from various suppliers. The production process consists of several steps, starting with assembly of the "mother" circuit board, which contains the central processing unit. This assembly takes place in the CPU Assembly Department. The company recently hired a new accountant who prepared the following report for the department for May using the weighted-average method:
Units to be accounted for:
Work in process, May 1: materials 90%
complete; conversion 80% complete 5,200
Started into production 35,500
Total units 40,700
Units accounted for as follows:
Transferred to next department 31,300
Work in process, May 31: materials 75%
complete; conversion 50% complete 9,400
Total units 40,700
Cost Reconciliation
Cost to be accounted for:
Work in process, May 1 £ 18,980
Cost added in the department 133,509
Total cost to be accounted for £152,489
Cost accounted for as follows:
Work in process, May 31 £25,098
Transferred to next department 127,391
Total cost accounted for £152,489
The company's management would like some additional information about May's operation in the CPU Assembly Department. (The currency in England is the pound, which is denoted by the symbol £.)
Required:
Q1. How many units were completed and started during May? Units started and completed during May
Q2. What were the equivalent units of production for May for conversion costs and materials?
Materials Conversion
Equivalent units of production
Q3. What were the costs per equivalent unit for May? The subsequent additional data are available concerning the department's costs (Round your answers to 2 decimal places):
Materials Conversion Total
Work in process, May 1 £12,168 £6,812 £18,980
Costs added during May £85,241 £48,268 £133,509
Materials Conversion
Cost per equivalent unit £ £
Q4. Calculate the material cost and the conversion cost of the ending work in process.
Materials Conversion Total
Ending work in process inventory:
Equivalent units of production
Cost per equivalent unit
Cost of ending work in process inventory
Q5. The new manager of the CPU Assembly Department was asked to estimate the incremental cost of processing an additional 1,000 units during the department. He took the unit cost for an equivalent entire unit you computed in (3) above and multiplied this figure by 1,000. Will this technique yield a valid estimate of incremental cost?