Question

The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. September is the first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $3,100,000, while conversion costs equaled $3,648,000. Accounting records indicate that 3,100,000 valves were started in September and 3,000,000 valves were completed. Ending inventory was 40% complete as to conversion costs.

a. What is the direct materials cost per equivalent unit?

b. What is the conversion cost per equivalent unit?

c. What amount of direct materials costs is assigned to the ending work-in-process account?

d. What amount of conversion costs is assigned to the ending work-in-process account?

e. What is the total cost assigned to the units completed and transferred?

Answer 1

a
Direct materials cost	3100000
Divide by Equivalent units	3100000
Direct materials cost per equivalent unit	1.00
b
Conversion cost	3648000
Divide by Equivalent units	3040000	=3000000+(100000*40%)
Conversion cost per equivalent unit	1.20
c
Equivalent units in ending inventory	100000
X Direct materials cost per equivalent unit	1.00
Direct materials costs assigned to the ending work-in-process	100000
d
Equivalent units in ending inventory	40000	=100000*40%
X Conversion cost per equivalent unit	1.20
Conversion costs assigned to the ending work-in-process	48000
e
Units completed and transferred	3000000
X Total cost per equivalent unit	2.20	=1+1.20
Total cost assigned to the units completed and transferred	6600000