Question

The smelting department of Company X has the following production and cost data for September:

• Production: Beginning work in process 200 units that are 100% complete as to materials and 82% complete as to conversion costs; units started into production 1,000 units; units transferred out to next department 950 units; ending work in process are 100% complete as to materials and 42% complete as to conversion costs.

• Manufacturing costs: Beginning work in process TL8,200 materials, TL9,270 labor, and TL2,200 manufacturing overhead costs. In the current period, TL50,500 worth of materials, TL25,700 worth of labor and TL32,000 worth of manufacturing overhead costs are incurred.

Question:  Compute the conversion cost portion of the transferred out inventory if the company uses WA method to compute equivalent units.

Answer 1

	Physcial units	Materials	Conversion
Work in Process Beginning	200
Started during the period	1000
To account for	1200
Units transferred to finished goods	950	950	950
Conversion	250	250	105
Accounted for	1200
Equivalent units		1200	1055
	Materials	Conversion	Total
Cost of Beginning Work in Process	$               8,200	$          11,470	$             19,670
Cost added during the period	$            50,500	$          57,700	$          1,08,200
Total Cost	$            58,700	$          69,170	$          1,27,870
Equivalent units of Production	1200	1055
Cost per equivalent unit	$              48.92	$            65.56	$             114.48
	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	250	105
Cost per equivalent unit	$              48.92	$            65.56
Cost of Ending work in Process Inventory	$            12,229	$            6,884	$             19,113
Units Completed and transferred out
Units transferred to next department	950	950
Cost per equivalent unit	$              48.92	$            65.56
Cost of units transferred out	$            46,471	$          62,286	$          1,08,757

Ignore Dollar sign

Conversion cost portion of the transferred out inventory = $62286