Question

Exercise 16-17

The Cutting Department of Lasso Company has the following production and cost data for August.

Production				Costs
1.		Started and completed 10,000 units.		Beginning work in process		$0
2.		Started 2,000 units that are 40% completed at August 31.		Materials		45,000
				Labor		13,600
				Manufacturing overhead		16,100

Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process. Lasso Company uses the FIFO method to compute equivalent units.

Determine the equivalent units of production for (1) materials and (2) conversion costs.

		Materials		Conversion Costs
The equivalent units of production

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Compute unit costs. (Round unit costs to 2 decimal places, e.g. 2.25.)

		Materials		Conversion Costs
Unit costs		$		$

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Show the assignment of manufacturing costs to units transferred out and in work in process. (Round unit costs to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places, e.g. 1,225.)

Assignment of Costs
Transferred out		$
Work in process, August 31
Materials	$
Conversion costs
Total costs		$

Answer 1

1
	Materials	Conversion Costs
Started and completed	10000	10000
Ending work in process	2000	800
The equivalent units of production	12000	10800
2
	Materials	Conversion Costs
Total costs	45000	29700
/Equivalent units of production	12000	10800
Unit costs	3.75	2.75
3
Assignment of Costs
Transferred out		65000	=10000*(3.75+2.75)
Work in process, August 31
Materials	7500		=2000*3.75
Conversion costs	2200	9700	=800*2.75
Total costs		74700