Assignment
Zap Rap Inc. is a manufacturer of audio CDs. The company's chief financial officer is trying to verify the accuracy of the December 31 work in process and finished goods inventories prior to closing the books for the year. He strongly suspects that the year-end dollar balances are incorrect, but he believes that all the other data are accurate. The year-end balances shown on Zap Rap's books are as follows:
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Units
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Costs
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Work in process, December 31 (materials 100% complete; conversion 50% complete)
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43,600
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$ 121,294
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Finished goods, December 31
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57,900
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$ 193,797
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There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department.
A review of the company's inventory and cost records has disclosed the following data:
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Costs
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Units
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Materials
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Conversion
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Work in process, January 1 (materials 100% complete; conversion 80% complete)
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34,400
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$
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48,160
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$
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49,192
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Started into production
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810,000
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Costs added during the year
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$
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1,134,000
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$
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1,620,686
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Units completed during the year
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800,800
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Required:
1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year. (Round your "Cost per equivalent unit" answers to 2 decimal places.)
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Materials
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Conversion
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Equivalent units of production
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Cost per equivalent units
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2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.
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Materials
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Conversion
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Totals
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Cost of ending work in process inventory
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Costs of finished goods inventory
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3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31. (Round intermediate calculations to 2 decimal places.)
Record the entry to adjust the work in process and finished goods inventories
4. Determine the cost of goods sold for the year, assuming that there is no underapplied or overapplied overhead.
Cost of Goods Sold: