Question

The Polishing Department of Major Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process.

Production: Beginning inventory 1,860 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 45,100; ending inventory of 5,800 units 10% complete as to conversion costs.

Manufacturing costs: Beginning inventory costs, comprised of $20,800 of materials and $41,608 of conversion costs; materials costs added in Polishing during the month, $225,740; labor and overhead applied in Polishing during the month, $125,900 and $258,240, respectively.

1, Compute the equivalent units of production for materials and conversion costs for the month of September.

2. Compute the unit costs for materials and conversion costs for the month

3. Determine the costs to be assigned to the units transferred out and in process.

Answer 1

1) Unit transferred out = 1860+45100-5800 = 41160

	Whole Unit	EUP-Material	EUP-Conversion
Unit transferred out	41160	41160	41160
Ending WIP	5800	5800	580
Equivalent unit	46960	46960	41740

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	20800	41608
Cost added	225740	125900+258240 = 384140
Total Cost	246540	425748
Equivalent unit	46960	41740
Cost per equivalent unit	5.25	10.20

3) Cost of unit transferred out = (5.25+10.20)*41160 = 635922

Cost of ending WIP = (5800*5.25+580*10.20) = 36366