Question

Sister Ltd. manufactures two types of electronic calculators, standard and deluxe. The only difference between the two products is the quality of the electronic components used; the deluxe uses higher quality components.

Data for the month of March were:

	Standard	Deluxe
Units completed	100	80
Closing Work-in-Process	20	40
Material costs in March	$2,400	$3,360

Conversion costs in March amounted to $3,300.

Closing Work-in-Process for both types was complete as to material. Standard was 50% complete as to conversion and Deluxe 75% complete as to conversion. There were no opening inventories of work-in-process.

Find unit cost of the Standard and Deluxe calculators respectively and cost of closing work-in-process at the end of March

Answer 1

Unit Cost:-

	Standard	Deluxe
Material cost per unit	(2400/120) =20	(3360/120) =28
Conversion Cost per unit	15	15
Unit cost	35	43

Conversion cost per unit = Total conversion cost/Total equivalent units of conversion cost

Equivalent units of conversion cost = 110 + 110 = 220

Conversion cost per unit = 3300/220 = 15

Cost of Closing WIP:-

	Standard	Deluxe
Material cost	(20 * 20) =400	(28 * 40) =1120
Conversion cost	(15 * 10) =150	(15 * 30) =450
Closing WIP	550	1570

Units completed related to Material & Conversion cost:-

	Standard		Deluxe
	Material	Conversion Cost	Material	Conversion cost
Units Completed	100	100	80	80
Closing WIP	(20 * 100%) =20	(20 * 50%) =10	(40 * 100%) =40	(40 * 75%) =30
Total Equivalent Units Completed	120	110	120	110