Question

Syed & Zhang Customized Manufacturing Ltd. produces several different alternators for over 10 different auto manufacturers that currently have manufacturing operations located in Southwestern Ontario. Each one of these customers have very different specifications.

Syed & Zhang also has several departments. The first is the moulding department, followed by the customization department and then finally the finishing department. In the first department that being the moulding department they create a very specific template for the alternators. This component is called an Altitude Alternator which is the starting point for all the different types of alternators that are manufactured at Syed & Zhang. The following relates to the production of these alternators during the month of June in the moulding department:

Please keep in mind that their previous controller recommended they use process costing. Base your calculations on the assumption that Syed & Zhang continue to use process costing for allocating and tracking costs.

Work-in-process inventory, June 1		4,300	alternators
Direct materials: 100% complete	$	10,780
Conversion: 30% complete	$	15,558
Units started during June		18,300	trusses
Units completed during June and transferred out		17,300	trusses
Work-in-process inventory, June 30
Direct materials: 100% complete
Conversion: 30% complete
Costs incurred during June
Direct materials	$	59,340
Conversion	$	92,392

Required

Using the weighted-average method, calculate the following:

1-a. Costs per equivalent unit. (Round your answers to 4 decimal places.)

1-b. Cost of goods completed and transferred out. (Round "Cost per EU" to 4 decimal places. Round final answer to nearest whole dollars.)

1-c. Costs remaining in the Work-in-Process Inventory account. (Round "Cost per EU" to 4 decimal places. Do not round other intermediate calculations. Round final answer to nearest whole dollars.)

2. Assume that you are the company’s controller. The production department’s June equivalent unit cost is higher than expected. If the manager of the first department asks you to do him a favor by increasing the ending inventory completion percentage from 30 to 50% to lower the unit costs, how much would unit cost be affected by this request? (Round your answer to 4 decimal places.)

Answer 1