Question

Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures the tents in two departments: Stitching and Customizing. All four models are processed initially in Stitching where all material is assembled and sewn into a basic tent. The Rookie model is then transferred to finished goods. After processing in Stitching, the other three models are transferred to Customizing for additional add-ons, and then transferred to finished goods. There were no beginning work-in-process inventories on August 1. Data for August are shown in the following table. Ending work in process is 55 percent complete in Stitching and 50 percent complete in Customizing. Conversion costs are allocated based on the number of equivalent units processed in each department. Units started Units completed in Stitching Units completed in Customizing Materials Total Rookie Novice Hiker Expert 600 560 310 160 540 540 285 100 525 270 70 $56, 440 $19,200 $16,800 $11,160 $9,280 Conversion costs: Stitching Customizing Total conversion costs $55,260 27,000 $82,260 Required: a. What is the unit cost of each model transferred to finished goods in August? b. What is the balance of the Work-in-Process Inventory on August 31 for Stitching? For Customizing? Complete this question by entering your answers in the tabs below. Required A Required B What is the unit cost of each model transferred to finished goods in August? (Round intermediate calculations to nearest whole number.) Product Unit Cost Rookie $ 68 Novice $ 96 Hiker $ 102 Expert $ 124

Answer 1

Req A	Unit cost
	Rookie	67.52
	Novice	91.30
	Hiker	97.30
	Expert	119.30
Req b	Work In Process Inventory
	Stitching	10,123
	Customizing	5,766

Working Notes: (Req A)
Product	Material Cost (1)	No. of Units (2)	Cost per Units (3) = (1)/(2)
Rookie	19200	600	32
Novice	16800	560	30
Hiker	11160	310	36
Expert	9280	160	58

Conversion cost per equivalent Units - Stitching
	Physical Units	Conversion cost
		Eq. Units
Flow of Units:
Units to be accounted for:
Beginning WIP inventory	0
Units started this period	1630
Total Units accounted for:	1630
Units accounted for:
Completed and transferred out	1465	1465
Units in ending Inventory	165	90.75
Total Units accounted for:	1630	1555.75
	Total	Conversion Cost
Cost to be accounted for:
Cost in beginning WIP	0	0
Current Period costs	55260	55260
Total cost to be accounted for:	55260	55260
Cost per equivalent Units
Conversion cost		35.52
Conversion cost per equivalent Units - Customizing
	Physical Units	Conversion cost
		Eq. Units
Flow of Units:
Units to be accounted for:
Beginning WIP inventory	0
Units started this period	925
Total Units accounted for:	925
Units accounted for:
Completed and transferred out	865	865
Units in ending Inventory	60	30
Total Units accounted for:	925	895
	Total	Conversion Cost
Cost to be accounted for:
Cost in beginning WIP	0	0
Current Period costs	27000	27000
Total cost to be accounted for:	27000	27000
Cost per equivalent Units
Conversion cost		30.17

Cost of Units Transferred to Finished Goods	Rookie	Novice	Hiker	Expert
Unit Material Cost	32	30	36	58
Stitching Department Conversion cost	35.52	35.52	35.52	35.52
Customizing Department Conversion cost		25.78	25.78	25.78
Total	67.52	91.30	97.30	119.30

Working Note(Req 2:)
WIP Ending Inventory balance
Stitching Department
Material Cost	No. of Units	Unit Cost	Total Cost
Rookie	60	32	1,920
Novice	20	30	600
Hiker	25	36	900
Expert	60	58	3,480
Total material cost			6,900
Conversion costs	90.75	35.52	3,223
Total			10,123
Customising Department
Material Cost	No. of Units	Unit Cost	Total Cost
Novice	15	30	450
Hiker	15	36	540
Expert	30	58	1,740
Total material cost			2,730
Conversion costs:
From Stitching	60	35.52	2,131
From Customizing	30	30.17	905
Total Conversion Cost			3,036
Total			5,766