Problem:
Standard-costing with beginning and ending work in process. Penelope's Pearls Company (PPC) is a manufacturer of knock off jewelry. Penelope attends Fashion Week in New York City every September and February to gauge the latest fashion trends in jewelry. She then makes trendy jewelry at a fraction of the cost of those designers who participate in Fashion Week. This Fall's biggest item is triple-stranded pearl necklaces. Because of her large volume, Penelope uses process costing to account for her production. In October, she had started some of the triple strands. She continued to work on those in November. Costs and output figures are as follows:
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Penelope's Pearls Company Process Costing For the Month Ended November 30, 2012
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Units
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Direct Materials
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Conversion Costs
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Standard cost per unit
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$3.00
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$10.50
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Work in process, beginning inventory (Nov. 1)
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24,000
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$72,000
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$176,400
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Degree of completion of beginning work in process
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100%
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70%
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Started during November
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124,400
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Completed and transferred out
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123,000
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|
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Work in process, ending inventory (Nov. 30)
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25,400
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Degree of completion of ending work in process
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100%
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50%
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Total costs added during November
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$329,000
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$1,217,000
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1. Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
2. Compute the total standard costs of pearls transferred out in November and the total standard costs of the November 30 inventory of work in process.
3. Compute the total November variances for direct materials and conversion costs.