Question

P16.5A (LO 3, 4) Polk Company manufactures basketballs. Materials are added at the beginning of the production process and conversion costs are incurred uniformly. Production and cost data for the month of July 2020 are as follows. Determine equivalent units and unit costs and assign costs. Percentage Complete 60% Units 500 1,000 600 40% Production Data—Basketballs Work in process units, July 1 Units started into production Work in process units, July 31 Cost Data-Basketballs Work in process, July 1 Materials $750 Conversion costs 600 Direct materials Direct labor Manufacturing overhead $1,350 2,400 1,580 1.240 Instructions a. Calculate the following 1. The equivalent units of production for materials and conversion costs. 2. The unit costs of production for materials and conversion costs. 3. The assignment of costs to units transferred out and in process at the end of the accounting period.

Answer 1

a-1)

	Materials	Conversion Costs
Units transferred	900	900
Work in process units, July 31	600	(600*40%)= 240
Equivalent units	1500	1140

Units transferred= Work in process units, July 1+Units started-Work in process units, July 31

= 500+1000-600= 900 units

2)

	Materials	Conversion Costs
Cost of work in process, July 1	$750	$600
Cost added during July	2400	(1580+1240)= 2820
Total costs	$3150	$3420
Equivalent units	1500	1140
Cost per equivalent unit	$2.10	$3.00

3)

Transferred out ($2.10+3.00)*900		$4590
Work in process, July 31
Materials (600*$2.10)	1260
Conversion costs (240*$3.00)	720	1980
Total costs		$6570