Question

Sanchez & Company produces paints. On July 1, it had no work-in-process inventory. It starts production of 107,000 gallons of paint in July and completes 87,000 gallons. The costs of the resources used by Sanchez in July consist of the following:

Materials $296,100

Conversion costs (labor and overhead) $274,800

Required:

The production supervisor estimates that the ending work-in-process is 84 percent complete. Compute the cost of paint transferred to finished goods and the snount in work-in-process ending inventory as of July 31.

Cost of paint transferred to finished goods:

Work-in-process ending inventory:

Answer 1

Solution

Cost of paint transferred to finished goods: $471,087

Work-in-process ending inventory: $ 99,822

Working

Reconciliation of Units
A	Opening WIP	-
B	Introduced	107,000
C=A+B	TOTAL	107,000
D	Transferred	87,000
E=C-D	Closing WIP	20,000

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	87,000			100%	87,000.0	100%	87,000
Closing WIP	20,000			100%	20,000.0	84%	16,800
Total	107,000			Total	107,000.0	Total	103,800

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Total Cost to be accounted for		$ 296,100	$ 274,800	$ 570,900
Total Equivalent Units		107,000	103,800
Cost per Equivalent Units		$              2.77	$                     2.65

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 2.77	20,000	$          55,345.79	87,000	$ 240,754
Conversion cost	$ 2.65	16,800	$          44,476.30	87,000	$ 230,324
TOTAL	$ 570,900	TOTAL	$ 99,822	TOTAL	$ 471,078