Lavalear Corporation uses a process costing system and traces costs through several processing departments, starting with the Bonding Department. Shown below is information taken from the Bonding Department's September production cost report:
Cost Data: Bonding Department | |
Direct materials costs in beginning inventory, September 1 | $ 50,400 |
Conversion costs in beginning inventory, September 1 | 36,000 |
Direct materials costs incurred in September | 789,750 |
Conversion costs incurred in September | 787,500 |
Physical Units: Bonding Department | |
Units in process, September 1 | 300 |
Units transferred out during September | 1,500 |
Units in process, September 30 | 500 |
Percentages of Completion: Bonding Department | |
Direct materials, September 1 | 40% |
Conversion, September 1 | 25 |
Direct materials, September 30 | 75% |
Conversion, September 30 | 30 |
a. Compute the cost per equivalent unit of direct materials and conversion carried forward from August and assigned to the Bonding Department's beginning inventory on September I.
b. Compute the cost per equivalent unit of direct materials and conversion incurred by the Bonding Department in September.
c. Discuss how the cost figures computed in parts a and b would be useful to the company's management.
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