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 1,600 units that are 100% complete as to materials and 30% complete as to conversion costs. units started during the period ar 42,900; ending inventory of 5,000 units 10% complete as to conversion costs Manufacturing costs: Beginning inventory costs, comprised of $20,000 of materials and $43,180 of conversion costs, material costs added in Polishing during the month, $175,800; labor and overhead applied in Polishing during the month, $125,680 and $257,140, respectively Instructions (a) Compute the equivalent units of production for materials and conversion costs for the month of September (b) Compute the unit costs for materials and conversion costs for the montlh (c) Determine the costs to be assigned o the units transferred out and in process NOTE: Enter a number in cells requesting a value enter either a number or a formula in cells with a"?".

Answer 1

Part (a)

PARTICULARS	PHYSICAL UNITS
WIP(Work in Progress) on Sept 1	1600
Units introduced during September	42900
Total	44500

PARTICULARS	PHYSICAL UNITS
Units Transferred out during September (44500-5000)	39500
WIP(Work in Progress) on Sept 30 (Given)	5000
Total	44500

PARTICULARS	Equivalent UNITS
	Materials	Conversion Cost
Units Transferred out during September (W.N. 1	39500	39500
WIP(Work in Progress) on Sept 30 (W.N. 1)	5000	500
Total	44500	40000

W.N. 1

PARTICULARS	Equivalent UNITS
	Materials	Conversion Cost
WIP(Work in Progress) on Sept 1	1600	480 (1600 x 30%)
Units Introduces during September which are fully produced (42900-5000)	37900	37900
Units of WIP on Sept1 Processed during September which are fully produced	nil	1120 (1600 x 70%)
Total	39500	39500

Part (b)

Particulars	Direct Materials (in $)	Conversion cost (in $)	Total (in $)
WIP on Sept 1	20000	43180	63180
Cost Added to Production During September	175800	382820 (125680 +257140)	558620
Total cost	195800	426000	621800

Part (c)

Particulars	Amount (in $)
Cost of unit Transferred out (W.N. 2) (421156.63+175310.49)	596467.12
WIP Sept 30 Material: (175800/42900) x 5000 units =20489.51 Conversion Cost: [382820/(37900+1120+500) x 500 units] =4843.37	25332.88
Total Cost (596467.12+25332.88)	621800.00

W.N. 2

PARTICULARS	AMOUNT (in $)
	Materials	Conversion Cost
WIP(Work in Progress) on Sept 1	20000	43180
Units Introduces during September which are fully produced for 37900 units (42900-5000).	155310.49 [(175800/42900) x 37900]	367127.48 [382820/(37900+1120+500) x 37900]
Units of WIP on Sept1 Processed during September which are fully produced	nil	10849.15 [382820/(37900+1120+500) x 1120]
Total	175310.49	421156.63