Question

The Polishing Department of Major Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,660 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 45,300; ending inventory of 7,800 units 10% complete as to conversion costs. Manufacturing costs: Beginning inventory costs, comprised of $22,000 of materials and $40,521 of conversion costs; materials costs added in Polishing during the month $217,496; labor and overhead applied in Polishing during the month, $126,700 and $258,140, respectively. Compute the equivalent units of production for materials and conversion costs for the month of September. lateria Conversion Costs The equivalent units of production

Answer 1

Note weight average method is assumed

1. Calculation of equivalent units of production.

In weighted average it is assumed that opening stock is started and completed in this year itself.

Hence it will be considered 100% with respect to both material and conversion.

Opening inventory = 1660 units

Started and completed = started - closing

= 45300 - 7800

= 37500

Completed units = 37500 + 1660 = 39160

Closing = 7800

Equivalent units

Material = (39160*100%) + (7800*100%) = 46960

Conversion cost = (39160*100%) + (7800*10%) = 39940

2.

Calculation of unit costs

Material = (opening+added) / equivalent units

= ($22000+$217496) / 46960 = $5.10 per unit

Conversion cost = ($40521+$126700+$258140) / 39940 = $10.65

3. Cost to be assigned

Transferred out = 39160 * ($5.10+$10.65) = $616770

Closing stock = (7800*$5.10) + (780*$10.65) = $48087

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