Question

Everglades Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Everglades uses weighted-average costing.

Required:

(Use 4 decimal places in your calculations.)

a. Compute the equivalent units of production for each input.
b. Compute the cost per unit.
c. Compute the cost transferred out to finished goods.
d. Compute the ending work-in-process inventory balance.

Answer 1

A)Units completed and transfered out = 5000+58000-6000=57000

	Material	conversion
Units completed and transfered out	57000	57000
Ending WIP	6000	2400     [6000*.40]
Equivalent units	63000	59400

b).

	Material	conversion
Cost of beginning WIP	124800	104500
Cost incurred during the period	1537000	2124375
Total cost incurred	1661800	2228875
equivalent unit	63000	59400
cost per equivalent unit	26.38	37.52

c)

cost transferred out to finished goods. =Units completed and transfered out [material cost per unit +conversion cost per unit]

   =57000[26.38+37.52]

    = 3642300

d)ending work-in-process inventory balance. =[6000*26.38]+[2400*37.52]

          = 158280+ 90048

             = 248328