Assignmnet (MGT 402)

Mc080402809

Q1. How many units were stared and completed during January?

As per work in process in January 10,000 units are as our opening balance and
58000 units are added to in it and during January 60000 units were completed and 8000
units are in process.

Q2. What were the equivalent units for January for material and conversion costs?

Equivalent units produced

Material Conversion cost
Completed units 60,000 60,000
W.I.P 8000 * 0.75 = 6000 8000 * 0.50 = 4000
Total 66000 64000

Q3. What were the costs per equivalent unit for January? The following additional
data are available concerning the department’s cost:

Per units cost

Material 132000/66000 2
Conversion cost 70400/64000 1.1
Total 3.1

Q4. Verify the accountant’s ending work in process inventory figure (£16,400) given
in the report.
Cost Apportionment figure (16400)
Material 6000 * 2 12000
Conversion cost 4000 * 1.1 4400
Total 16400

Q5. What criticism can be made of the unit costs that have been computed using
weighted –Average Method by the company and which method is superior for
computing unit cost under process costing based on your criticism?

In this case the firm apply the weighted average method for calculation its units
cost but with this method we dont know the previous & current cost of the inventory this
method mix the current cost with prior period cost, unit cost with the FIFO method give
accurate cost of any unit produce in during any period with the weighted average method
the department’s actual performance in the current reporting period is affected by what
has happened previously in earlier periods.
Superior Method
I think cost control in process costing, the FIFO method is superior to weighted-
average because the cost per equivalent unit under FIFO represents the cost for the
current period’s efforts only. It is impossible to monitor cost trends using the weighted
average method as you see in this above case because the costs of the prior period and the
current period are mixed together. Under the FIFO method we know the units transferred
out beginning inventory cost, the cost added in this period to complete the beginning
inventory, and the cost of units started and completed are considered. The weighted
average method equivalent units include both the units placed into production in the
current period and the units from the prior period that are still in production at the
beginning of this period. FIFO method does not include the equivalent finishing units of
the prior period that are still in production at the beginning of this period.