PROCESS COSTING Davy Company manufactures portable generators. Each generator passes through the assembly and testing departments.

PROCESS COSTING

Davy Company manufactures portable generators. Each generator passes through the assembly and testing

departments. The process costing system at Davy has a single direct cost category (direct materials) and a single

indirect cost category (conversion costs). Direct materials are added at the beginning at the process. Conversion

costs are added evenly during the process. When the Assembly Department finishes work on each generator, it is

immediately transferred to the Testing Department. Davy Company uses the first‐in‐first‐out method of process

costing.

Data for the Assembly Department for November 2016 are as follows:

Percent Complete Units Costs

DM Conv DM Conv DM Conv

Work in Process, 1 Nov 100% 52% 5,000 5,000 $1,260,000 $400,000

Started during November 20,000 20,000

Completed 22,000 22,000

Work in Process, 30 Nov 100% 65% 3,000 3,000

Costs added in November $4,400,000 $2,300,000

(DM = Direct Material, Conv = Conversion)

Direct materials are added when the testing department is 90 percent complete. Conversion costs are added

evenly during the Testing Department’s process. As work in assembly is completed, each unit is immediately

transferred to testing. As each unit is completed in testing, it is immediately transferred to Finished Goods.

Data for the Testing Department for November 2016 are as follows:

Percent Complete Units Costs

TI DM Conv TI DM Conv TI DM Conv

Work in Process, 1 Nov 100 0 55 7,400 7,400 7,400 $2,900,000 $0 $900,000

Started during November 22,000 22,000 22,000

Completed 26,300 26,300 26,300

Work in Process, 30 Nov 100 0 65 3,100 3,100 3,100

Costs added in November $7,489,930 $11,000,000 $4,100,000

(DM = Direct Material, Conv = Conversion, TI = Transferred In)

Required:

1. For the Assembly Department, what is the cost of units in process at the end of November?

2. For the Testing Department, what is the cost of units in process at the end of November? (Tip: The cost added

in November to Transferred In is the same as the cost of units transferred out of Assembly).

3. For the Testing Department, what is the cost of units completed and transferred to Finished Goods?







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