I am taking managerial accounting online. (probably the WORST DECISION, I've ever made) I don't even know where to begin quite frankly. (yes I did read the instructions from the admin on NOT posting textbook questions, but please have mercy)

I've read the chapter and still do not understand. Without giving me the answer can someone explain this to me? What are they asking? How do I get there? The only thing I have so far is 6000*60% = 3600, and that's the conversion. That's all I have :/



date| | item | debit | credit | debit| credit|
1 bal 6000 3/5 completed 21840

31 direct materials 240000 768000 789840
31 direct labor 153200 943040
31 factory overhead 38160 981200

31 goods transferred 242000 ?
31 bal?? Units 1/5 completed ?

1) prepare a cost of production report identify the missing amounts for work in process blending report

2) assuming that January 1 work in process inventory includes direct materials of 18,600 determine the increase or decrease in the cost per equivalent unit ofr direct materials and conversion between December and January

As you must know, a cost of production report has two sections:
(a) Quantity Schedule; and,
(b) Cost Schedule

(a) Quantity schedule shows the quantity to be accounted for comprising beginning inventory and units started/transferred from previous process. Then this schedule further explains how much of the units were transferred out and the balance is the ending units in process. This is the simplest form. There can be other items such as normal and abnormal losses, units added, etc. You need not worry about this in the present problem.

(b) The Cost schedule also has two parts: Costs to be accounted for and the accounting treatment of these costs.

Now you need to compute the equivalent production units. This depends mainly on the method of valuation used such as FIFO or Weighted Average. The EPU is slightly different in both the cases.

I you are using FIFO method, the follow the following procedure:

Units transferred out xxxx
Less: Opening WIP (xxx)
Units started and completed this period xxxx
Work done on beginning inventory xxx
Work done on ending inventory xxx
Equivalent production units xxxx

Since the beginning units are partly completed in the previous period, work done in the current period will be to complete the unfinished work, in your case 2/5

You will use these EPU for computing unit costs by dividing current costs with EPU

If you are using Weighted average method:
Units transferred out xxxx
Ending WIP units xxx
Equivalent Units xxxx

Unit costs will be computed by adding the value of each item of costs in the beginning inventory to the current cost of each element and dividing by the EPU.

I hope this will help you get started. Try it out and if there is any problem, we will try to help you out.

My answer is same as rehmanvohra answer