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

Instructions

(a)  Compute the physical units of production.

(b) Determine the equivalent units of production for materials and conversion costs.

(c)  Compute the unit costs of production.

(d) Determine the costs to be assigned to the units transferred out and in process.

(a)	Physical Units:
	Units to be accounted for:
	Work in process, January 1
	Started into productiom
	Total Units
	Units accounted for:
	Transferred out
	Work in process, January 31
	Total Units

(b)	Equivalent Units:
		Materials	Conversion Costs
	Units transferred out
	Work in Process Jan 31
	Total Equivalent Units

(c)		Unit Costs
	Materials
	Conversion cost
	Total unit cost

(d)	Costs accounted for:
	Transferred out
	Work in process, Jan 31:
	Materials
	Conversion costs
	Total costs

Answer 1

(a)	Physical Units:
	Units to be accounted for:
	Work in process, January 1	0
	Started into productiom	50000
	Total Units	50000
	Units accounted for:
	Transferred out	47500
	Work in process, January 31	2500
	Total Units	50000

(b)	Equivalent Units:
		Materials	Conversion Costs
	Units transferred out	47500	47500
	Work in Process Jan 31
	Material	2500*100% = 2500
	Conversion		2500*40% = 1000
	Total Equivalent Units	50000	48500

(c)		Unit Costs
	Materials	510000/50000 = 10.20
	Conversion cost	242500/48500 = 5
	Total unit cost	15.20

(d)	Costs accounted for:
	Transferred out (47500*15.20)		722000
	Work in process, Jan 31:
	Materials (2500*10.20)	25500
	Conversion costs (1000*5)	5000	30500
	Total costs		752500