Question

The ledger of Waterway Company has the following work in process account. Work in Process—Painting 5/1 Balance 3,790 5/31 Transferred out ? 5/31 Materials 7,020 5/31 Labor 4,598 5/31 Overhead 1,980 5/31 Balance ? Production records show that there were 400 units in the beginning inventory, 30% complete, 1,700 units started, and 1,400 units transferred out. The beginning work in process had materials cost of $2,640 and conversion costs of $1,150. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process. How many units are in process at May 31? Work in process, May 31 units What is the unit materials cost for May? (Round unit cost to 2 decimal places, e.g. 2.25.) The unit materials cost for May $ What is the unit conversion cost for May? (Round unit cost to 2 decimal places, e.g. 2.25.) The unit conversion cost for May $ What is the total cost of units transferred out in May? The total cost of units transferred out in May $ What is the cost of the May 31 inventory? Work in process $

Answer 1

a. Units in Process at the end of may

Closing WIP = Beginning WIP + Units Started - Units Transferred

Closing WIP = 400 + 1700 - 1400 = 700 Units

b. Unit cost of material for may = Total Cost of Material / number of units started = 7020 / 1700 = $4.13

c. Unit Conversion Cost

EQuivalent Units = Opening WIP + Units Transferred + Ending WIP

Equivalent Units = 400 * 70% + 1400 * 100% + 700 *40% = 1960 Units

Unit Conversion Cost = (Total Labor + Total Overhead) / Equivalent Units = (4598 + 1980) / 1920 = $3.36

d. total cost of units transferred out in May = Units Transferred * (Material Cost + Conversion Cost)

total cost of units transferred out in May = 1400 * 7.49= $10486

e. cost of the May 31 inventory = Material Cost + Conversion Cost = 700 * 40% * 7.49 = $2097.20