Question

Required information (The following information applies to the questions displayed below.) Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted average method of process costing. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June): June 1 balance Materials Direct labor Overhead June 30 balance Work in Process-wiring Department 45,000 Completed and transferred to Finished Goods 140,400 89,500 107,000 The June 1 work in process inventory consisted of 6,000 units with $24,250 in materials cost and $20,750 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 60% complete with respect to conversion. During June, 38,500 units were started into production. The June 30 work in process inventory consisted of 10,000 units that were 100% complete with respect to materials and 50% complete with respect to conversion 13. What is the amount of conversion cost transferred to finished goods? (Round your intermediate calculations to 2 places.) Conversion cost transferred to finished goods

Answer 1

Step 1. Finished Goods during the month:

Opening WIP 6000 units

Add: Sent for Production    38500 units

Less: Closing WIP 10000 units

Finished Goods                34500 units

Step 2: Arriving at Conversion cost of Opening WIP during the month:

6000 units at the beginning of the month was 100% complete with respect to Materials (i.e $24,250) and 60% complete with respect to Conversion cost (i.e $20,750) which means that remaining 40% has been completed in the month of June.

i.e $20,750 * 0.40/0.60 = $13,833.33

Out of the total Conversion Cost during the month (Labor+Overheads = $196,500), $13,833.33 has been utilized for opening WIP, and the remaining $182,666.67 has been used for 38500 units introduced for production during the month.

Step 3: Arriving at Conversion cost of 1 unit of those introduced for production in June:

There are 10000 units at the end of the month which are 100% complete with respect to Materials and 50% complete with respect to conversion.

All together 38500 units were sent for production of which 10000 units have been completed 50% with respect to conversion. Which means that 28500 are fully completed.

The Equivalent number of Units hence will be 28500 + (10000 * 50%) = 33500 units with relation to Conversion.

Conversion cost used for these units as arrived under step 3 is $ 182,666.67, per unit cost will be (182,666.67/33500) = $5.45

Step 4: Conversion cost of Finished Goods:

As arrived in Step 1 - Finished Goods = 34,500 units

This includes 6000 units at the beginning of the month. The conversion cost during the month for 6000 units as arrived in Step 2 is $13,833.33.

Remaining 28,500 units (34,500-6,000) are from the units sent for production in June

Conversion Cost per unit as arrived in Step 3 is $5.45

So cost of 28,500 units will be (28500 * $5.45) = $155,325

Total Conversion Cost Transferred to Finished Goods is ($13,833.33 + $155,325) = $ 169,158.33