Question

Yamamoto Company manufactures a single product that goes through two processes, mixing and cooking. This data pertains to the mixing department for August 2012:

WIP inventory, August 1 (conversion: 80% complete) 27,000 units

WIP inventory, August 31(conversion 40% complete) 17,000 units

Units started into production 60,000

Units completed and transferred out ?

COSTS

WIP inventory, August 1:

Material X $64,800

Material Y $89,100

Conversion $119,880

Costs added during August:

Material X $152,700

Material Y $138,400

Conversion $302,520

Material X is added at the beginning of work in the mixing department. Material Y is also added in the mixing department, but not until units are 60% complete with regard to conversion. Conversion costs are incurred uniformly during the process.

!. Calculate EU, costs per EU, costs of units transferred out, and cost of WIP ending inventory

Answer 1

Unit transferred out = 27000+60000-17000 = 70000 Units

a) Equivalent unit of material X = 70000+(17000*100%) = 87000 Units

Equivalent unit of material Y = 70000+(17000*0%) = 70000 UNits

Equivalent unit of Conversion = 70000+(17000*40%) = 76800 Units

b) Cost per equivalent unit :

Cost per equivalent unit of material X = (64800+152700)/87000 = 2.5

Cost per equivalent unit of material Y = (89100+138400)/70000 = 3.25

Cost per equivalent unit of conversion = (119880+302520)/76800 = 5.50

3) Cost of unit transferred out = (2.5+3.25+5.50)*70000 = $787500

4) Cost of ending work in process = (17000*2.5+0*3.25+6800*5.5) = $79900