Question

Sanchez & Company produces paints. On July 1, it had no work-in-process inventory. It starts production of 111,000 gallons of paint in July and completes 88,000 gallons. The costs of the resources used by Sanchez in July consist of the following:

  

Materials	$	209,398
Conversion costs (labor and overhead)		281,100

Required:

The production supervisor estimates that the ending work-in-process is 81 percent complete. Compute the cost of paint transferred to finished goods and the amount in work-in-process ending inventory as of July 31. (Do not round intermediate calculations.)

Answer 1

Solution

Transferred out	$             397,996
Work in process	$                92,502

Working

Reconciliation of Units
A	Beginning WIP	-
B	Introduced	111,000
C=A+B	TOTAL	111,000
D	Transferred out	88,000
E=C-D	Ending WIP	23,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	88,000			100%	88,000	100%	88,000
Ending WIP	23,000			100%	23,000	81%	18,630
Total	111,000			Total	111,000	Total	106,630

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost				$ 0
Cost incurred during period		$ 209,398	$ 281,100	$ 490,498
Total Cost to be accounted for		$ 209,398	$ 281,100	$ 490,498
Total Equivalent Units		111,000	106,630
Cost per Equivalent Units		$                   1.89	$                     2.64	$                4.52

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.89	23,000	$          43,388.77	88,000	$        166,009.23
Conversion cost	$ 2.64	18,630	$          49,112.75	88,000	$        231,987.25
TOTAL	$ 490,498	TOTAL	$ 92,502	TOTAL	$ 397,996