Question

Steiner Corporation manufactures water skis through two processes: Molding and Packaging. In the Molding Department, fiberglass is heated and shaped into the form of a ski. In the Packaging Department, the skis are placed in cartons and sent to the finished goods warehouse. Materials are entered at the beginning of both processes. Labor and manufacturing overhead are incurred uniformly throughout each process. Production and cost data for the Molding Department for January 2017 are presented below.

Production Data	January
Beginning work in process units	–0–
Units started into production	50,000
Ending work in process units	2,500
Percent complete – ending inventory	40%
Cost Data	January
Materials	$510,000
Labor	92,500
Overhead	150,000
Total	$752,500

		Equivalent Units
Quantities	Physical Units	Materials	Conversion Costs
Units to be accounted for:	(Step 1)	(Step 2)
Work in process, Jan 1	0
	50,000
Total units	50,000
Units accounted for:
Transferred out
Work-in-process, Jan 31
Total units

		Equivalent Units
Costs	Physical Units	Materials	Conversion Costs	Total
Units costs:
Total costs  (step 3)	(a)
Equivalent units	(b)
Unit costs  (a) / (b)
Costs to be accounted for:
Work in process, Jan 1				0
Total costs

Costs Reconciliation Schedule  (Step 4)
Costs to be accounted for:
Transferred out
Work in process,  Jan 1
Materials
Conversion costs
Total costs

Answer 1

Solution

		Equivalent Units
Quantities	Physical Units	Materials	Conversion Costs
Units to be accounted for:	(Step 1)	(Step 2)
Work in process, Jan 1	0
Unit started	50000
Total units	50000
Units accounted for:
Transferred out	47500	47500	47500
Work-in-process, Jan 31	2500	2500	1000
Total units	50000	50000	48500
		Equivalent Units
Costs	Physical Units	Materials	Conversion Costs	Total
Units costs:
Total costs  (step 3)	(a)	$ 510,000.00	$ 242,500.00	$ 752,500.00
Equivalent units	(b)	50000	48500
Unit costs  (a) / (b)		$            10.20	$               5.00	$            15.20
Costs to be accounted for:
Work in process, Jan 1				0
Cost added during month				$ 752,500.00
Total costs				$ 752,500.00
Costs Reconciliation Schedule  (Step 4)
Costs to be accounted for:
Transferred out				$ 722,000.00
Work in process,  Jan 1
Materials			$    25,500.00
Conversion costs			$      5,000.00	$    30,500.00
Total costs				$ 752,500.00