Question

Graham Petroleum produces oil. On May 1, It had no work-in-process Inventory. It started production of 199 million barrels of oil in May and shipped 174 million barrels In the pipeline. The costs of the resources used by Graham In May consist of the following: Materials Conversion costs (labor and overhead) $2,658 million $3.399 million Required: The production supervisor estimates that the ending work in process is 60 percent complete on May 31. Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending Inventory as of May 31. (Do not round Intermediate calculations. Enter your answers in millions. For example, enter "1" Instead of "1,000,000".) million Cost of oil shipped in the pipeline Work-in-process ending inventory million

Answer 1

Solution

Cost of oil shipped to pipeline	$                  4,760
Work in process-ending inventory	$                  1,288

Working

Reconciliation of Units
A	Beginning WIP	-
B	Introduced	199
C=A+B	TOTAL	199
D	Transferred out	147
E=C-D	Ending WIP	52

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	147			100%	147	100%	147
Ending WIP	52			100%	52	60%	31
Total	199			Total	199	Total	178

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 0	$ 0	$ 0
Cost incurred during period		$ 2,658	$ 3,390	$ 6,048
Total Cost to be accounted for		$ 2,658	$ 3,390	$ 6,048
Total Equivalent Units		199	178
Cost per Equivalent Units		$                 13.36	$                   19.02	$             32.38

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 13.36	52	$                694.55	147	$            1,963.45
Conversion cost	$ 19.02	31	$                593.54	147	$            2,796.46
TOTAL	$ 6,048	TOTAL	$ 1,288	TOTAL	$ 4,760