Question

# O'Leary Company manufactures Product Z in a two-stage production cycle in Departments A and B. Materials...

O'Leary Company manufactures Product Z in a two-stage production cycle in Departments A and B. Materials are added at the beginning of the process in Department B. O'Leary uses the weighted-average method. Conversion costs for Department B were 40% complete as to the 27,500 units in the beginning work-in-process (WIP) inventory and 50% complete as to the 38,500 units in the ending work-in-process inventory. 55,000 units were completed and transferred out of Department B during October. An analysis of the costs relating to work-in-process inventories and production activity in Department B for October follows:

 Transferred- in Costs Materials Costs Conversion Costs WIP, October 1: \$ 55,000 \$ 16,500 \$ 5,500 Costs added in October 132,000 30,250 24,200

The total cost per equivalent unit transferred-out for October of Product Z, rounded to the nearest penny, was:

 Transferred-in costs Materials cost Conversion cost Units completed and transferred out 55000 55000 55000 (+) Ending equivalent unit [ Ending work in process units * % completion ] 38500 38500 19250 Total equivalent units of production 93500 93500 74250
 Transferred-in costs Materials cost Conversion cost Total Cost of WIP, October 1 55000 16500 5500 (+) Costs added in October 132000 30250 24200 Total cost 187000 46750 29700 (/) Total equivalent units of production 93500 93500 74250 cost per equivalent unit 2.00 0.50 0.40 2.90

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