Prepare schedules as of December 31, 20x1. to compute the following — Timing Technology Inc manufactures devices During 900 000 Units were completed and

Timing Technology Inc. manufactures timing devices. During 20x1, 900,000 Units were completed and transferred to finished-goods inventory. On December 31, 20x1 there were 300,000 units in work in process. These units were 50 percent complete as to conversion and 100 percent complete as to direct material. Finished-goods inventory consisted of 200.000 units. Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60 percent of direct-labor costs. There was no finished-goods inventory on January 1. 20x1. a review of the inventory cost records disclosed the following information:

.:.

Required:

Prepare schedules as of December 31, 20x1. to compute the following:

1. Physical flow of units.

2. Equivalent units of production using the weighted-average method,

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3. Costs per equivalent unit for material and conversion.

4. Cost of the December 31, 20x1, finished-goods inventory and work-in-process inventory.

SOLUTION:

1.	1.	Physical flow of units:	Physical flow of units:	Physical flow of units:	Physical flow of units:
						Physical Units	Physical Units	Physical Units
		Work in process, 1/1/x1	Work in process, 1/1/x1	Work in process, 1/1/x1	Work in process, 1/1/x1	200,000	200,000	200,000
		Units started during 20x1	Units started during 20x1	Units started during 20x1	Units started during 20x1	1,000,000	1,000,000	1,000,000
		Total units to account for	Total units to account for	Total units to account for	Total units to account for	1,200,000	1,200,000	1,200,000
		Units completed and transferred out during 20x1	Units completed and transferred out during 20x1	Units completed and transferred out during 20x1	Units completed and transferred out during 20x1	900,000	900,000	900,000
		Work in process, 12/31/x1	Work in process, 12/31/x1	Work in process, 12/31/x1	Work in process, 12/31/x1	300,000	300,000	300,000
		Total units accounted for	Total units accounted for	Total units accounted for	Total units accounted for	1,200,000	1,200,000	1,200,000
2.	Equivalent units:	Equivalent units:
			Physical Units	Percentage of Completion with Respect to Conversion	Equivalent Units	Equivalent Units	Equivalent Units	Equivalent Units	Equivalent Units	Equivalent Units
			Physical Units	Percentage of Completion with Respect to Conversion	Direct Material	Direct Material	Direct Material	Conversion	Conversion	Conversion
	Work in process, 1/1/x1	Work in process, 1/1/x1	200,000	80%
	Units started during 20x1	Units started during 20x1	1,000,000
	Total units to account for	Total units to account for	1,200,000
	Units completed and transferred out during 20x1	Units completed and transferred out during 20x1	900,000	100%	900,000	900,000	900,000	900,000	900,000	900,000
	Work in process, 12/31/x1	Work in process, 12/31/x1	300,000	50%	300,000	300,000	300,000	150,000	150,000	150,000
	Total units accounted for	Total units accounted for	1,200,000		________	________	________	________	________	________
	Total equivalent units	Total equivalent units			1,200,000	1,200,000	1,200,000	1,050,000	1,050,000	1,050,000

Costs per equivalent unit:	Costs per equivalent unit:	Costs per equivalent unit:
			Direct Material	Conversion	Total	Total
Work in process, 1/1/x1	Work in process, 1/1/x1	Work in process, 1/1/x1	$ 200,000	$ 504,000a	$ 704,000	$ 704,000
Costs incurred during 20x1	Costs incurred during 20x1	Costs incurred during 20x1	1,300,000	3,192,000b	4,492,000	4,492,000
Total costs to account for	Total costs to account for	Total costs to account for	$1,500,000	$3,696,000	$5,196,000	$5,196,000
Equivalent units	Equivalent units	Equivalent units	1,200,000	1,050,000
Costs per equivalent unit	Costs per equivalent unit	Costs per equivalent unit	$1.25c	$3.52d	$4.77e	$4.77e
aConversion cost	=	direct labor + overhead	direct labor + overhead	direct labor + overhead	direct labor + overhead
	=	direct labor + (60% x direct labor)	direct labor + (60% x direct labor)	direct labor + (60% x direct labor)	direct labor + (60% x direct labor)
	=	160% x direct labor	160% x direct labor	160% x direct labor	160% x direct labor
	=	160% x $315,000	160% x $315,000	160% x $315,000	160% x $315,000
	=	$504,000	$504,000	$504,000	$504,000
bConversion cost	=	160% x direct labor	160% x direct labor	160% x direct labor	160% x direct labor
	=	160% x $1,995,000	160% x $1,995,000	160% x $1,995,000	160% x $1,995,000
	=	$3,192,000	$3,192,000	$3,192,000	$3,192,000
c$1.25 = $1,500,000 ÷ 1,200,000	c$1.25 = $1,500,000 ÷ 1,200,000	c$1.25 = $1,500,000 ÷ 1,200,000	c$1.25 = $1,500,000 ÷ 1,200,000	c$1.25 = $1,500,000 ÷ 1,200,000	c$1.25 = $1,500,000 ÷ 1,200,000
d$3.52 = $3,696,000 ÷ 1,050,000	d$3.52 = $3,696,000 ÷ 1,050,000	d$3.52 = $3,696,000 ÷ 1,050,000	d$3.52 = $3,696,000 ÷ 1,050,000	d$3.52 = $3,696,000 ÷ 1,050,000	d$3.52 = $3,696,000 ÷ 1,050,000
e$4.77 = $1.25 + $3.52	e$4.77 = $1.25 + $3.52	e$4.77 = $1.25 + $3.52	e$4.77 = $1.25 + $3.52	e$4.77 = $1.25 + $3.52	e$4.77 = $1.25 + $3.52

Cost of ending inventories:
Cost of goods completed and transferred out:
	900,000 x $4.77	900,000 x $4.77	900,000 x $4.77	$4,293,000	$4,293,000
Cost remaining in 12/31/x1 work-in-process inventory:	Cost remaining in 12/31/x1 work-in-process inventory:	Cost remaining in 12/31/x1 work-in-process inventory:	Cost remaining in 12/31/x1 work-in-process inventory:
Direct material:
	300,000 x $1.25	300,000 x $1.25	300,000 x $1.25		$375,000
Conversion:
	150,000 x $3.52	150,000 x $3.52	150,000 x $3.52		528,000
Total cost of 12/31/x1 work in process	Total cost of 12/31/x1 work in process	Total cost of 12/31/x1 work in process	Total cost of 12/31/x1 work in process		$903,000
Check: Cost of goods completed and transferred out	Check: Cost of goods completed and transferred out	Check: Cost of goods completed and transferred out	Check: Cost of goods completed and transferred out	$4,293,000	$4,293,000
Cost of 12/31/x1 work-in-process inventory	Cost of 12/31/x1 work-in-process inventory	Cost of 12/31/x1 work-in-process inventory	Cost of 12/31/x1 work-in-process inventory	903,000	903,000
Total costs accounted for	Total costs accounted for	Total costs accounted for	Total costs accounted for	$5,196,000	$5,196,000
The cost of the ending work-in-process inventory is $903,000	The cost of the ending work-in-process inventory is $903,000	The cost of the ending work-in-process inventory is $903,000	The cost of the ending work-in-process inventory is $903,000
Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:	Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:	Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:	Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:	Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:	Ending finished-goods inventory: Of the 900,000 units completed during 20x1, 200,000 units remain in finished-goods inventory on December 31, 20x1. Therefore:
$4,293,000 x (200,000 ÷ 900,000) = $954,000*	$4,293,000 x (200,000 ÷ 900,000) = $954,000*	$4,293,000 x (200,000 ÷ 900,000) = $954,000*	$4,293,000 x (200,000 ÷ 900,000) = $954,000*	$4,293,000 x (200,000 ÷ 900,000) = $954,000*	$4,293,000 x (200,000 ÷ 900,000) = $954,000*
The cost of the ending finished-goods inventory is $954,000.	The cost of the ending finished-goods inventory is $954,000.	The cost of the ending finished-goods inventory is $954,000.	The cost of the ending finished-goods inventory is $954,000.	The cost of the ending finished-goods inventory is $954,000.	The cost of the ending finished-goods inventory is $954,000.
*Also, $954,000 = 200,000 x $4.77 per unit	*Also, $954,000 = 200,000 x $4.77 per unit	*Also, $954,000 = 200,000 x $4.77 per unit	*Also, $954,000 = 200,000 x $4.77 per unit	*Also, $954,000 = 200,000 x $4.77 per unit	*Also, $954,000 = 200,000 x $4.77 per unit