Question

    Sal Company uses process costing system in its production. The material costs were 80% complete and 55% conversion costs complete with respect to the 8,000 units in work in process at August 1. Additional 20,000 units were started during the month of August. During August, 18,000 units were completed and transferred to the next department. The material costs were 40% complete and 70% conversion costs complete with respect to the ending work in process at August 31. An analysis of the costs relating to work in process at August 1 and to production activity for August follows:

Work in process 8/1 Costs added during August

Materials $25,000   80,000

Conversion $8,000 40,000

Compute the cost of goods completed and transferred to the next department,

Compute the cost of work in process ending inventory.

Answer 1

Equivalent units of production (EUP)
	Units	% material	EUP-Materials	% Conversion	EUP- Conversion
Units Completed and transferred out	18000	100%	18000	100%	18000
units of Ending work in process	10000	40%	4000	70%	7000
Equivalent units of production			22000		25000

Cost per Equivalent unit:	Material	Conversion
Cost of Beginning Work in Process	$25,000	$8,000
Cost added during the month	$80,000	$40,000
Total Costs	$1,05,000	$48,000
/Equivalent units of Production	22000	25000
Cost per Equivalent unit of Production	$4.77	$1.92

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
Material	18000	$4.77	$85,909
Conversion	18000	$1.92	$34,560
Total transferred out			$1,20,469

Cost of ending work in process	EUP	Cost per EUP	Total Cost
Material	4000	$4.77	$19,091
Conversion	7000	$1.92	$13,440
Total Ending work in process			$32,531