Exercise 4-29

1.      Physical flow of Units

The physical flow of units refers to the actual units to be accounted for over a period, regardless of any work to be accomplish

In calculating the physical flow of units, add the units started or transferred into production during the period to the units in p
total units to be accounted for (Ronald, 2019).

= Hence, the no. of units in closing work-in-process was 30,000 (from the first table below)

2.      Equivalent Units

The equivalent units of production measures the work done over a period and is expressed in complete units. Ofte
unit of completed products. The equivalent units refer to the sum of units completed and transferred out plus equ
2018).

=Hence, the equivalent unit of the direct material (from the table below) are 110,000 and the conversion is 90,000

Percentage of
Physical Units completion with
respect to conversion

Work in process, Apr 1 10,000 20%

Unit started during April 100,000

Total units to account for 110,000

Units completed and transferred

80,000 (Refer Note 1) 100% (Refer Note 2)
outWorking
during April
Notes:(A).
1. (Physical units in beginning work in process) + (Physical units started) – (Physical units completed and transferred out) = (p
work in process)
Work in process,
Let physical unitsApr 30 (B) be value x
completed 30,000 33.33%
Hence, = the physical units at the beginning work process + Physical units started - Physical units in ending work in process
= 10,000 + 100,000 – 80, 000
=30,000
Total units accounted for 110,000
2. Physical units that are completed and transferred out are 100% complete for both the direct material and conversion.
3. The Direct Material for units completed = Units Completed* the % of completion
Total= equivalent
30,000*100% units (A+B)
= 30,000 (Weygandt et al., 2018).
4. The conversion for units completed = Units Completed* the % of completion
= 30,000*33.33%
= 10,000 (Ronald, 2019).
 = 30,000*33.33%
= 10,000 (Ronald, 2019).

3.      Computation of Unit Cost

Can be calculated by dividing the total cost to the equivalent units as follows;

1.The cost of goods completed andDirect

transferred out during
Material ($) April
Conversion ($)
Cost of Goods = the no. of units transferred out*the total cost per equivalent unit
Work in process, Apr 1 (A)
= 80,000*3.81 22,000 4,500
Costs incurred= $304,800.
during April (B) 198,000 158,400
Total costs
2. The costtoofaccounts
the April for
work-in-process inventory
The Direct Material = the no. of equivalent units of 220,000
(A+B) direct material*the cost per162,900
equivalent unit
=30,000*$2
Equivalent=$60,000
Units (Given in et al., 2018).
(Weygandt
110,000cost per equivalent unit
90,000
question)
Conversion = the no. of equivalent units of conversion*the
= 10,000*$1.81
=$18,100. unit 2 1.81
Cost per equivalent
Total Cost of Work in Process (220,000/110,000) (162,900/ 90,000)
=Cost of goods completed + Cost of Work-in-process
= $304,800 + $78,100
= $382,900 (Ronald, 2019).
4.      The Analysis of Total Cost
 Working Notes
The analysis of
5.the total costs;
      The spreadsheet
The cost of goods completed and transferred out during the month of April:
= (No. of units transferred out)*(the total cost per equivalent unit)
= 80,000*4.36 The computation of cost per equivalent unit
=$348,800
Direct Material
Therefore, the total cost of goods completed ($)
and transferred Conversion ($)(Weygandt et al., 2018).
was $304,800
Opening Work in process, Apr 1
66,000
The cost of closing work-in-process on April 31 st, inventories: 18,000
(A)
The total cost of the closing work-in-process on 31 st = the direct material cost + the conversion cost
= (theincurred
Costs no. of equivalent
during theunit of direct material)*(the198,000
month cost per equivalent unit of 158,400
conversion) + (the no. of equivalent unit of co
per equivalent unit of conversion).
Total =Cost (A)
(30,000*2.40) + (10,000*1.96) 264,000 176,400
= (72,000
Equivalent + 19,600)
Units (B) 110,000 90,000
= $91,600.
Cost perthe
Hence, equivalent
total costunit (A/closing
of the B) work-in-progress was2.4 $91,600 (Ronald, 2019). 1.96

The total cost accounted for = (the cost of goods completed and transferred out + the cost of closing work-in-process for May
Hence, the cost+per
=348,800 equivalent unit for direct material is $2.40
91,600
=$440,400.
Hence, the total cost accounted was segregated between the cost of goods completed and the closing work-in-process (Rona

References
RONALD, W. H. (2019). MANAGERIAL ACCOUNTING+ CONNECT ACCESS CARD: Creating Value in a Dynamic Business Environm
EDUCATION.
Weygandt, J. J., Kimmel, P. D., Kieso, D. E., & Aly, I. M. (2018). Managerial Accounting: Tools for Business Decision-making. Joh
a period, regardless of any work to be accomplished.

nto production during the period to the units in process at the beginning of the period. The amount is often the

t table below)

riod and is expressed in complete units. Often entities rely on such a measure to ascertain the cost per
units completed and transferred out plus equivalent units of the ending work in progress (Weygandt et al.,

ow) are 110,000 and the conversion is 90,000

Equivalent Units

Direct material Conversion

80,000 80,000
Physical units completed and transferred out) = (physical units in ending
30,000 (100% of 30,000) 10,000 (33.33% of
(Refer Note 3) 30,000) (Refer Note 4)
arted - Physical units in ending work in process

e for both the direct material and conversion.

mpletion
110,000 90,000
tion
 Total ($)
t unit
26,500
356,400

per equivalent unit 382,900

nt unit
3.81
(2+1.81)
ent unit
Weygandt etTotal ($)
al., 2018).

84,000
t + the conversion cost
of conversion) + (the no. of equivalent unit of conversion)*(the cost
356,400
440,400

019). 4.36

out + the cost of closing work-in-process for May 31 st inventory)

completed and the closing work-in-process (Ronald, 2019).

D: Creating Value in a Dynamic Business Environment. MCGRAW-HILL

counting: Tools for Business Decision-making. John Wiley & Sons.

en the

st per
dt et al.,
Exercise 4-16

The International Paper Company is a global firm providing packaging material, as well as palp and paper
to its consumers using various brands (The International Paper Inc., 2020).

The firms business is primamrily dependent on the use and processing of natural resources to convert them
into more appropriate form of usable products. For instance, paper making process entail tree cutting, pulp
extraction, pulp processing, and producing the paper. the entire process can be broken down into
subprocessess rendering the process costing as ideal costing method to ensure the firm torn down on cost
and enhance its profitableness (The International Paper Inc., 2020).

Hence, each unit remains accountable for its respective/ assigned costs ensuring efficiency in cost
allocation and profitableness in every production unit. Similalry, at every stage of production purchasing
of raw material from outsiders may be rather beneficial contrary to procuring through the air processing
method rendering sound decision implementations. Such would only be a possibility by depoying the
process costing method (Weygandt et al., 2018).

Likewise, issuing bonus to the management and their teams on the success of deployed process basing on
the efficiency and the profitability of each unit is an ideal incentive to leverage their work efficiency and
lower costs.

Process costing also helps the management to properly assess the costs being incurred at each and every
stage of the production process. Any inefficiency can be easily identified and taken care of.
Hence process costing technique would be quite beneficial to the company in this case (Weygandt et al.,
2018).

References
The International Paper Inc. (2020, May 14). Company Overview | International Paper. Retrieved September 2,
2020, from http://www.internationalpaper.com/company
Weygandt, J. J., Kimmel, P. D., Kieso, D. E., & Aly, I. M. (2018). Managerial Accounting: Tools for Business Decision-
making. John Wiley & Sons.
 as palp and paper

ces to convert them

l tree cutting, pulp
own into
orn down on cost

cy in cost
ction purchasing
e air processing
depoying the

process basing on
rk efficiency and

t each and every

of.
Weygandt et al.,

d September 2,

Business Decision-