Question

QualCo manufactures a single product in two departments: Cutting and Assembly. During May, the Cutting department completed a number of units of a product and transferred them to Assembly. Of these transferred units, 38,100 were in process in the Cutting department at the beginning of May and 156,500 were started and completed in May. May’s Cutting department beginning inventory units were 70% complete with respect to materials and 30% complete with respect to conversion. At the end of May, 51,900 additional units were in process in the Cutting department and were 70% complete with respect to materials and 20% complete with respect to conversion. The Cutting department had $510,650 of direct materials and $425,810 of conversion cost charged to it during May. Its beginning inventory included $74,675 of direct materials cost and $29,093 of conversion cost.

1. Compute the number of units transferred to Assembly.

2.Using the FIFO method, assign May’s costs to the units transferred out and assign costs to its ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)

Answer 1

1.

Number of units transferred to Assembly:

Units in beginning work in process	38,100
Units started and completed in May	156,500
Total number of units transferred to Assembly	194,600

2.

		Equivalent units
	Whole units	Direct material	Conversion
Units in beginning work in process	38,100	11,430 (38,100*30%)	26,670 (38,100*70%)
Units started and completed	156,500	156,500	156,500
Units in ending work in process	51,900	36,330 (51,900*70%)	10,380 (51,900*20%)
Total equivalent units		204,260	193,550

	Direct material	Conversion
Cost charged during May	$510,650	$425,810
Total equivalent units	204,260	193,550
Cost per equivalent unit	$2.5	$2.2

Cost of units transferred out

Cost of beginning work in process:
Beginning balance	$103,768
Add: Cost incurred to complete $28,575 (11,430*$2.5)+$58,674 (26,670*$2.2)	87,249	$191,017
Cost of units started and completed:
Direct material (156,500*$2.5)	$391,250
Conversion (156,500*$2.2)	344,300	735,550
Total cost of units transferred out		$926,567

Cost of ending work in process:

Direct material (36,330*$2.5)	$90,825
Conversion (10,380*$2.2)	22,836
Total cost of ending work in process	$113,661