Question

Gregg Industries uses three operations in sequence to manufacture an assortment of flower baskets. In each operation, the same procedures, time, and costs are used to perform that operation, regardless of the basket style being produced. During March, a batch of 500 baskets of style D and a batch of 800 baskets of style F were put through the first operation. All materials for a batch are introduced at the beginning of the operation for that batch. The costs shown below were incurred in March for the first operation (assume WAC approach) $4,450 $3,600 Direct labor Manufacturing overhead Direct materials: Style D Style F $1,200 $2,400 There were no inventories at the beginning of the month; 400 units of Style D and 600 units of Style F were transferred to the next operation. The ending inventories were 30% and 60% complete for Styles D and F, respectively. Required: What is the total cost of the ending inventory in process for operation #17

Answer 1

Solution: Total cost of ending inventory $1890

Working:

Equivalent units of production	D	F
Started and completed	400	600
Ending inventory	30	120
Total	430	720

Unit costs:		Working
Materials - D	$2.40	$1,200/500
Materials - F	$3.00	$2,400/800
Conversion costs	$7.00	($3,600 + 4,450)/(430 + 720)

Ending inventory
Materials - D	$450	(100* $2.40) + (30 *$7.00)
Materials - F	$1,440	(200 * $3.00) + (120* $7.00)
	$1,890