Question

Washington, Inc., makes three models of motorized carts for vacation resorts, X-10, X-20, and X-40. Washington manufactures the carts in two assembly departments: Department A and Department B. All three models are processed initially in Department A, where all material is assembled. The X-10 model is then transferred to finished goods. After processing in Department A, the X-20 and X-40 models are transferred to Department B for final assembly, and then transferred to finished goods.

There were no beginning work-in-process inventories on April 1. Data for April are shown in the following table. Ending work in process is 20 percent complete in Department A and 60 percent complete in Department B. Conversion costs are allocated based on the number of equivalent units processed in each department.

	Total			X-10			X-20			X-40
Units started					570			330			230
Units completed in Department A					390			260			190
Units completed in Department B								220			150
Materials	$	365,750		$	71,250		$	99,000		$	195,500
Conversion costs:
Department A	$	291,850
Department B		52,250
Total conversion costs	$	344,100

Required:

a. What is the unit cost of each model transferred to finished goods in April?

b. What is the balance of work-in-process inventory on April 30 for Department A? Department B?

Answer 1

a.	Product	Unit Cost
	X-10	$450
	X-20	$750
	X-40	$1,300
		Department A	Department B
b.	Balance of work­in­process ending inventory	$96,350	$78,000
	Working
		X-10	X-20	X-40
a.	Materials	$125	$300	$850
	Conversion costs:
	Department A	$325	$325	$325
	($291,850/898)
	Department B	$0	$125	$125
	($52,250/418)
	Unit Cost	$450	$750	$1,300
	Equivalents units for Department A
	Completed and transferred	390	260	190	Total
	Ending inventory	36	14	8
	Total	426	274	198	898
	Equivalents units for Department B
	Completed and transferred	-	220	150	Total
	Ending inventory	-	24	24
	Total	-	244	174	418
b.
	Department A
	Material
	X-10 (180 x $125)	$22,500
	X-20 (70 x $300)	$21,000
	X-40 (40 x $850)	$34,000
	Conversion costs (58 x $325)	$18,850
	Total	$96,350
	Department B
	Material
	X-20 (40 x $625)	$25,000
	X-40 (40 x $1,175)	$47,000
	Conversion costs (48 x $125)	$6,000
	Total	$78,000