Question

At Onyx Incorporated, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include: WIP beginning (70% for conversion) Units started Units completed and transferred out WIP ending (50% for conversion) Beginning WIP direct materials Beginning WIP conversion costs Costs of materials added Costs of conversion added 15,200 units 150,000 units 120,000 units 45,200 units $52.500 $25,200 $443,100 $260,000 What is the total cost of units completed and transferred out? $750,000 $540,658 $628,696 $600,000

Answer 1

Answer: $600,000

Calculations:

i. Equivalent units:

	Materials	Conversion costs
Units completed and transferred out	120,000	120,000
WIP ending
[45,200 x 100%]	45,200
[45,200 x 50%]		22,600
Total equivalent units	165,200	142,600

ii. Cost per equivalent unit:

	Materials	Conversion costs	Total
Beginning WIP	$52,500	$25,200
Cost added	$443,100	$260,000
Total cost	$495,600	$285,200
÷ Equivalent units	165,200	142,600
Cost per equivalent unit	$3.00	$2.00	$5.00

iii. Cost of units completed and transferred out = Units completed and transferred out x Total cost per equivalent unit

= 120,000 units x $5.00

= $600,000