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# Managerial Essay

Problems Chapter 4
Problem 4-26
Moravia Company processes and packages cream cheese. The following data have been compiled for the month of April. Conversion activity occurs uniformly throughout the production process. 1) Analysis of physical flow of units.

2) Calculation of equivalent units.
3) Computation of unit costs.
4) Analysis of total costs.
5) Build a Spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: the April 1 work in process costs were \$27,000 for direct material and \$5,000 for conversion.

1.| |   Physical
Units|
| Work in process, April 1| 10,000|
| Units started during April| 100,000|
| Total units to account for| 110,000|
| Units completed and transferred out during April| 80,000| | Work in process, April 30| 30,000|
| Total units accounted for| 110,000|

2.| | | | | |
| |

Physical Units| Percentage of Completion with Respect to Conversion|
Equivalent Units|
| | | | Direct Material|
Conversion|
| Work in process, April 1| 10,000  | 20%| | | | Units started during April| 100,000  | | | | | Total units to account for| 110,000  | | | | | Units completed and
transferred

out during April|
80,000  |
100%|
80,000|
80,000   |
| Work in process, April 30|  30,000  | 33.33%|  30,000|  9,900   | | Total units accounted for| 110,000  | | | | | Total equivalent units| | | 110,000| 89,900   |

3.| | | | |
| | Direct Material| Conversion|   Total| | Work in process, April 1| \$22,000| \$ 4,500| \$26,500  |
| Costs incurred during April|  198,000|  158,400|  356,400  | | Total costs to account for| \$220,000| \$162,900| \$382,900  | | Equivalent units| 110,000| 89,900| | | Costs per equivalent unit| \$2.00| \$1.81| \$3.81  |

4.| Cost of goods completed and transferred out during April:| | | | | |
| (Units Transferred) *(Total Cost per equiv. unit) =| 80,000\$3.81| \$304,961| | | |
| Cost remaining in April 30 work-in-process inventory:| | | | | |
| Direct material:| | |
| | | |
| (# of equivalent units of Direct Material ) * ( Cost per Equivalent Unit of Direct Material) =| 30,000\$2.00| \$60,000| | | | |

| Conversion:| | |
| | | |
| (# of equivalent units of conversion) * (Cost per equivalent unit of conversion) =| 9,900\$1.81|   17,939| | | | |
| Total cost of April 30 work in process| \$77,919| | | | |
| Check: Cost of goods completed and transferred out| \$304,961| | Cost of April 30 work-in-process inventory|  17,939| | Total costs accounted for| \$382,900| | | |

| 5Build a Spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: the April 1 work in process costs were \$27,000 for direct material and \$5,000 for conversion.|

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