Question

Exercise 3-10 (Part Level Submission)

Overton Company has gathered the following information.

Units in beginning work in process		21,000
Units started into production		254,000
Units in ending work in process		25,400
Percent complete in ending work in process:
Conversion costs		60	%
Materials		100	%
Costs incurred:
Direct materials		$110,000
Direct labor		$501,484
Overhead		$187,100

Show the assignment of costs to units transferred out and in process.

Transferred out		$
Ending work in process		$

How do I calculate the Transferred out and Ending work in process?

Answer 1

Solution:

Overton Company
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	21000
Started into Production	254000
Total units to account for	275000
Units accounted for:
Unit completed & Transferred out	249600	249600	249600
Units in ending inventory:	25400
Material (100%)		25400
Conversion (60%)			15240
Equivalent units of production	275000	275000	264840

Overton Company Computation of Cost per equivalent unit
Particulars	Material	Conversion	Total
Total cost to be accounted for	$110,000	$688,584	$798,584
Equivalent units of production	275000	264840
Cost per Equivalent unit	$0.40	$2.60

Overton Company Computation of Cost of ending WIP and units completed & transferred out
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	25400	15240
Cost per equivalent unit	$0.40	$2.60
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$10,160	$39,624	$49,784
Units completed and transferred	249600	249600
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$99,840	$648,960	$748,800