Question

4. The ledger of Kinsler Company has the following work in process account. Due wed. Work in Process-Painting Balance 5,390 5/31 Transferred out Materials 7,740 5/31 5/31 Labor 4,110 2,470 5/31 Overhead 5/31 Balance Production records show that there were 700 units in the beginning Inventory, 30% complete, 2,900 units started, and 3,100 units transferred. The beginning work in process had materials cost of $3,060 and conversion costs of $2,330. 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? (d) What is the total cost of units transferred out in May? (e) What is the cost of the May 31 inventory?

Answer 1

Step 1 :-Allocation of All Units :

BWIP	700	T-Out	3100
Started	2900	EWIP	500
Total	3600	Total	3600

Step 2: Schedule of EUP’s :

	Materials	Labor/OH
T-Out	3100	3100
EWIP	500	(500 * 40%) =200
Total EUP	3600	3300

Step 3 : Unit Cost Schedule :

	BWIP	Current	Total	EUP	Unit Cost
Material	$3060	$7740	$10800	3600	$3
Labor/OH	$2330	$6580	$8910	3300	$2.7
Total	$5390	$14320	$19710		$5.7

Step 4 : Production Cost Schedule :-

T-Out ($5.7 * 3100)		$17670
EWIP:
Materials ($3 * 500)	$1500
Labor/OH ($2.7 * 200)	$540
		$2040
Total Cost to be accounted for		$19710

(a) Units in Process at May 31 = BWIP + Started – Transferred

              = 700 + 2900 – 3100 = 500 units

(b) Unit Material cost for May = $3

(c) Unit conversion cost for May = $2.7

(d) Total cost of Unit transferred out = $17670

(e) Cost of May 31 Inventory = $2040