Question

Alvis Construction Supply Company has a department that manufactures wood trusses (wood frames used in the construction industry). The following information is for the production of these trusses for the month of February:

Work-in-process inventory, February 1		3,300	trusses
Direct materials: 100% complete	$	10,380
Conversion: 30% complete	$	15,158
Units started during February		17,900	trusses
Units completed during February and transferred out		16,900	trusses
Work-in-process inventory, February 29
Direct materials: 100% complete
Conversion: 30% complete
Costs incurred during February
Direct materials	$	58,940
Conversion	$	91,992

Required

Using the FIFO 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. (Do no round your intermediate calculations. Round your final answer to the nearest whole dollar.)

1-c. Costs remaining in the Work-in-Process Inventory account. (Do no round your intermediate calculations. Round your final answer to the nearest whole dollar.)

2. Assume that you are the company’s controller. The production department’s February 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

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