Question

The Polishing Department of Coronado Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process.

Production: Beginning inventory 1,520 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 46,300; ending inventory of 6,800 units 10% complete as to conversion costs.

Manufacturing costs: Beginning inventory costs, comprised of $20,500 of materials and $34,645 of conversion costs; materials costs added in Polishing during the month, $204,254; labor and overhead applied in Polishing during the month, $126,100 and $258,340, respectively.

Compute the unit costs for materials and conversion costs for the month. (Round unit costs to 2 decimal places, e.g. 2.25.)

		Materials		Conversion Costs
Unit costs		$		$

Answer 1

Solution

	Material	Conversion
Unit cost	$ 4.70	$ 10.05

..Alternate answer Using FIFO

	Material	Conversion
Unit cost	$ 4.41	$ 9.32

Working

Reconciliation of Units
A	Beginning WIP	1,520
B	Introduced	46,300
C=A+B	TOTAL	47,820
D	Transferred out	41,020
E=C-D	Ending WIP	6,800

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	41,020			100%	41,020	100%	41,020
Ending WIP	6,800			100%	6,800	10%	680
Total	47,820			Total	47,820	Total	41,700

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 20,500	$ 34,645	$ 55,145
Cost incurred during period (B)		$ 204,254	$ 384,440	$ 588,694
Total Cost to be accounted for (C=A+B)		$ 224,754	$ 419,085	$ 643,839
Total Equivalent Units(D)		47,820	41,700
Cost per Equivalent Units (E=C/D)		$                   4.70	$                   10.05	$                     14.75

.

Working for FIFO

STEP 1 (FIFO)
Reconciliation of Units
	Units	% already completed		% completed this period
		Material	Conversion	Material	Conversion
Beginning WIP	1,520	100%	30%	0%	70%
Units introduced	46,300
Total units to be accounted for	47,820
Completed and Transferred unit	41,020	0%	0%	100%	100%
Ending WIP	6,800	0%	0%	100%	10%

.

STEP 2 (FIFO)
Equivalent Units
	Total Units	Material		Conversion
Units Transferred:		% completed this period	Equivalent Units	% completed this period	Equivalent Units
From WIP	1,520	0%	-	70%	1,064
From units started/Introduced	39,500	100%	39,500	100%	39,500
Total	41,020		39,500		40,564
	Total Units	Material		Conversion
Ending WIP		% completed this period	Equivalent Units	% completed this period	Equivalent Units
Total	6,800	100%	6,800	10%	680
Total EUP	47,820		46,300		41,244

.

STEP 3
Cost per Equivalent Units
	Material		Conversion		TOTAL
Cost incurred in Current Period	$ 204,254		$ 384,440		$ 588,694
Total Equivalent Units	46,300		41,244
Cost per Equivalent Units	$ 4.41		$ 9.32		$ 13.73