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Unit Cost, Valuing Goods Transferred Out and EWIP During April, the grinding department of Tranx Inc....

Unit Cost, Valuing Goods Transferred Out and EWIP

During April, the grinding department of Tranx Inc. completed and transferred out 312,000 units. At the end of April, there were 156,000 units in process, 60% complete. Tranx incurred manufacturing costs totaling $2,433,600.

Required:

1. Calculate the unit cost.   $per unit

2. Calculate the cost of goods transferred out and the cost of ending WIP.

Cost of goods transferred out $
Cost of ending WIP $
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Answer #1

1. calculation of unit cost per unit.

Cost incurred. - $2433600

Units transferred - 312000 units

Units in process - 156000 units( 60% complete)

Units cost per unit= cost incurred ÷ Number of completed units produced

So total number of units produced = 312000 units + 156000units×60%

= 312000 units + 93600 units

completed units produced = 405600 units

Units cost per unit = $2433600 ÷ 405600 = $6 per unit

2. Calculation of cost of goods transferred cost of ending WIP :

Cost of goods transferred= units transferred × Units cost per unit

= 312000 × $6

Cost of goods transferred= $1872000

Cost of ending WIP= total cost incurred - cost of transferred units

= $2433600 - $1872000

= $561600.

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