| | | | | | Body | Body | Wiring | Wiring | | — Brite Ideas Inc mass-produces reading lamps Materials used constructing the lamp are

Brite Ideas, Inc., mass-produces reading lamps. Materials used in constructing the body of the lamp are added at the start of the process, while the materials used in wiring the lamps are added at the halfway point. All labor and overhead are added evenly throughout the manufacturing process. Brite Ideas uses process costing and had the following unit production information available for the months of June and July.

……………………………………………………………………………..June ……….July

Number of lamps in beginning work in process . . . . . . . . . . . . . . . . . . . . . . .900 ………1,100

Lamps transferred to finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,000……… 4,600

Number of lamps in ending work in process . . . . . . . . . . . . . . . . . . . . . . . .1,100 ………...800

In June, the lamps in beginning work in process were approximately 90 percent complete, while those in ending work in process were only 30 percent complete. In July, the units remaining in ending work in process were 80 percent complete. All lamps in ending work in process are finished during the next month.

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Instructions

a. For the month of June, calculate the equivalent units of production for the three major cost categories—body materials, wiring materials, and labor and overhead.

b. For the month of July, calculate the equivalent units of production for the three major cost categories—body materials, wiring materials, and labor and overhead.

SOLUTION

a.	a.	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods
		Units transferred out in June	Units transferred out in June	Units transferred out in June	Units transferred out in June	5,000	5,000
		Beginning inventory in process, June 1	Beginning inventory in process, June 1	Beginning inventory in process, June 1	Beginning inventory in process, June 1	(900)	(900)
		Units started and completed in June	Units started and completed in June	Units started and completed in June	Units started and completed in June	4,100	4,100
		Step 2: Determine equivalent units	Step 2: Determine equivalent units	Step 2: Determine equivalent units	Step 2: Determine equivalent units
						Body	Body	Wiring	Wiring
		Input resources required	Input resources required	Input resources required	Input resources required	Materials	Materials	Materials	Materials	Conversion	Conversion
		To finish beginning inventory, June 1:	To finish beginning inventory, June 1:	To finish beginning inventory, June 1:	To finish beginning inventory, June 1:
				Body materials	Body materials
				(900 units require 0% to complete)	(900 units require 0% to complete)	0	0
				Wiring materials	Wiring materials
				(900 units require 0% to complete)	(900 units require 0% to complete)			0	0
				Conversion	Conversion
				(900 units require 10% to complete)	(900 units require 10% to complete)					90	90
		To start and complete 4,100 units in June	To start and complete 4,100 units in June	To start and complete 4,100 units in June	To start and complete 4,100 units in June	4,100	4,100	4,100	4,100	4,100	4,100
		To start ending inventory in process on June 30:	To start ending inventory in process on June 30:	To start ending inventory in process on June 30:	To start ending inventory in process on June 30:
				Body materials (1,100 units 100% complete)	Body materials (1,100 units 100% complete)	1,100	1,100
				Wiring materials (1,100 units 0% complete)	Wiring materials (1,100 units 0% complete)			0	0
				Conversion (1,100 units 30% complete)	Conversion (1,100 units 30% complete)					330	330
		Total equivalent units in June	Total equivalent units in June	Total equivalent units in June	Total equivalent units in June	5,200	5,200	4,100	4,100	4,520	4,520
b.	b.	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods	Step 1: Determine flow of physical goods
		Units transferred out in July	Units transferred out in July	Units transferred out in July	Units transferred out in July	4,600	4,600
		Beginning inventory in process, July 1	Beginning inventory in process, July 1	Beginning inventory in process, July 1	Beginning inventory in process, July 1	(1,100)	(1,100)
		Units started and completed in July	Units started and completed in July	Units started and completed in July	Units started and completed in July	3,500	3,500
				Body materials	Body materials
				(1,100 units require 0% to complete)	(1,100 units require 0% to complete)	0	0
				Wiring materials	Wiring materials
				(1,100 units require 100% to complete)	(1,100 units require 100% to complete)			1,100	1,100
				Conversion	Conversion
				(1,100 units require 70% to complete)	(1,100 units require 70% to complete)					770	770
	To start and complete 3,500 units in July	To start and complete 3,500 units in July	To start and complete 3,500 units in July	To start and complete 3,500 units in July	3,500	3,500	3,500	3,500	3,500	3,500
	To start ending inventory in process on July 31:	To start ending inventory in process on July 31:	To start ending inventory in process on July 31:	To start ending inventory in process on July 31:
			Body materials (800 units 100% complete)	Body materials (800 units 100% complete)	800	800
			Wiring materials (800 units 100% complete)	Wiring materials (800 units 100% complete)			800	800
			Conversion (800 units 80% complete)	Conversion (800 units 80% complete)					640	640
	Total equivalent units in July	Total equivalent units in July	Total equivalent units in July	Total equivalent units in July	4,300	4,300	5,400	5,400	4,910	4,910

100% of body materials are added at the beginning of the process, whereas 100% of wiring materials are added at the half-way point. Conversion costs are incurred uniformly throughout the process.