Question

Journalize the April transaction. dat sts E3-3 The ledger of American Company has the following work in process acci Transferred out 5/1 5/31 5/31 5/31 5/31 Balance Materials Labor Overhead Balance Work in Process-Painting 3,5905/31 5,160 2,530 1,380 ? Production records show that there were 400 units in the beginning inventory, 30% com- plete, 1,600 units started, and 1,700 units transferred out. The beginning work in process had materials cost of $2,040 and conversion costs of $1,550. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process. Instructions (a) How many units are in process at May 31? (b) What is the unit materials cost for May? (c) What is the unit conversion cost for May? niso o 21209 or bus (d) What is the total cost of units transferred out in May? (e) What is the cost of the May 31 inventory?

Answer 1

1) Solution: Work in Progress May 31: 300 units

Working:

Work in process, May 1	400
Started into production	1,600
Total units to be accounted for	2,000
Less: Transferred out	-1,700
Work in process, May 31	300

　

2) Solution: Unit materials cost for May

Working:

Equivalent units of materials = [Units transferred out + Ending WIP units] = [1700 units + 300 units] = 2000 units

Total cost of direct materials = Work in process, May 1 + Costs Added = 2040 + 5160 = 7200

Per unit cost of equivalent of direct material = [Total cost of direct materials / Number of equivalent units of direct materials] = [7200 / 2000] = 3.60

3) Solution: Unit conversion cost for May: $3

Working:

Equivalent units of prod for conversion costs: [{(Units transferred out) + (Equivalent units of ending WIP for conversion costs)}] = [1700 + 120 (300 * 40%)] = 1820 units

Per unit cost of equivalent of conversion cost: [Total conversion cost / Number of equivalent units of cost of conversion] = [5460 / 1820 units] = 3.00

4) Total cost of units transferred in May: $11220

Working:

Total unit cost = [Unit cost of material + Unit cost of conversion] = [3.60 + 3.00] = $6.60

Total cost of units transferred out = [Unit transferred out * Total cost of unit] = [1700 * 6.60] = 11,220

5) Cost of the May 31 inventory: $1440

Working:

Cost of Ending Inventory = [Materials cost + Conversion costs] = [(300 * 3.60) + (120 * 3.00)] = 1440