ADM3346 – Fall 2019 Assignment 8 – Equivalent Units and Process Costing

Your assignment submission must be typed up in either Word or Excel and uploaded (one file only) to the
assignment drop-box before midnight Tuesday November 19.

A manufacturer uses process costing. It has one direct material cost pool and one conversion cost pool.
Information for the month is as follows:

Beginning of Month End of Month

Work in process: 22,000 units 10,000 units
Conversion (% of completion in WIP): 35% 85%
Costs of Materials in WIP: $ 80,000 ?
Costs of Conversion in WIP: $114,000 ?

During the month:

Units started during the month: 70,000 units
Costs incurred for Materials: $280,000
Costs incurred for Conversion: $270,000
Total Spoiled Units detected: 4,400 units

Other Income Statement Information:

Sales: $920,000
Admin expenses $200,000

95% of direct materials is added at the beginning of the process, and the remaining 5% of direct
materials (for packaging) is added immediately after inspection.

Inspection occurs when units are 90% converted, and inspection determines if the units are
“acceptable” or “spoiled”. Normal Spoilage is based on 6% of units started.

There were no finished goods or raw material inventories at any point of the process.

Required:

Part A: Prepare an Income Statement for the month and show the value of ending inventory,
assuming that inventory is based on modified FIFO,

Part B: Prepare an Income Statement for the month and show the value of ending inventory,
assuming that inventory is based on Weighted Average.

(you can omit the company name and period from the income statement)