Calculation of the unitand dollar amounts of raw materials inventory in heels at December 31, 2017:
Particulars | Number of units | cost per unit | Total cost |
Beginning inventory, December 31, 2016 | 1100 | $9 | $9,900 |
Purchase during the year | 47000 | $9 | $423,000 |
Inventory available for production |
48100 (47000+1100) |
$9 | $432,900 |
Less: Inventory transferred into production |
33000 (16500×2) |
$9 | $297,000 |
Ending inventory, December 31, 2017 |
15100 |
$9 |
$135,900 ($432,900-$297,000) |
Note:
Inventory transferred into production = number of boots pairs manufactured × 2 (one pair of boots requires 2 heels)
Inventory transferred into production = 16500×2
= 33,000.
Ending inventory = beginning inventory + purchase during the year - inventory transferred to production
Ending inventory = 1,100 + 47,000 - 33,000
= 15,100.
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