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In: Accounting

equirement 1. What is the cost per equivalent unit for conversion costs for KLN bottles in...

equirement 1. What is the cost per equivalent unit for conversion costs for KLN bottles in March

20172017?

Use a formula to solve for the cost per equivalent unit for conversion costs. (Round the cost per equivalent unit amount to the nearest cent. Conv. = conversion.)

Total conv. costs incurred	÷	Total equivalent units, conv. costs	=	Cost per equivalent unit, conv. costs
70840	÷		=

Requirement 2. Compute the cost per equivalent unit with respect to each of the three materials: cullets, silicone, and polypropylene.

Begin by using a formula to solve for the cost per equivalent unit with respect to cullets. (Round the cost per equivalent unit amount to the nearest cent. Conv. = conversion, Equiv. = equivalent.)

(	Cullets purchased	-	Ending inventory, cullets	) ÷	Equiv. units, cullets	=	Cost per equiv. unit, cullets
(	54300	-	5000	) ÷		=

Use a formula to solve for the cost per equivalent unit with respect to silicone. (Round the cost per equivalent unit amount to the nearest cent. Conv. = conversion, Equiv. = equivalent.)

(	Silicone purchased	-	Ending inventory, silicone	) ÷	Equiv. units, cullets	=	Cost per equiv. unit, silicone
(	22200	-	4000	) ÷		=

Use a formula to solve for the cost per equivalent unit with respect to polypropylene. (Round the cost per equivalent unit amount to the nearest cent. Conv. = conversion.)

Polypropylene used	÷	Equivalent units, polypropylene	=	Cost per equivalent unit, polypropylene
	÷		=

Requirement 3. What is the cost of goods completed and transferred out?

	Cost of goods
	completed and
	transferred
Direct materials
Conversion costs
Total

Requirement 4. What is the cost of goods formed but not assembled?

	Cost of goods
	formed but
	not assembled
Direct materials
Conversion costs
Total

Requirement 5. What is the cost of goods assembled but not finished?

	Cost of goods
	assembled but
	not finished
Direct materials
Conversion costs
Total

Cullets purchased $54,300

Silicone purchased $22,200

Polypropylene used $10,400

Total conversion costs incurred $70,840

Ending inventory, cullets $5,000

Ending inventory, silicone $4,000

Number of bottles completed and transferred 13,000

Inventory in process at the end of the month:

Units formed but not assembled 3,000

Units assembled but not finished 1,000

Consulting studies have indicated that of the total conversion costs required to complete a finished unit, the forming operation requires 50%,

the assembly 40%,

and the finishing 10%

Solutions

Expert Solution

1. Conversion costs incurred in March = $70,840

Equivalent units of work:

Units completed and transferred: 13,000 X 100% = 13,000

Units formed but not assembled: 3,000 X 50% = 1,500

Units assembled but not finished: 1,000 X 90% = 900

Total equivalent units: 15,400

Conversion cost per equivalent unit = $70,840/ 15,400 = $4.60

2. Cost per equivalent unit calculation for the 3 materials used:

Cullets: = ($54,300-$5,000)/(13000+3000+1000) = $49,300/17000 => $2.90

Silicone: = ($22,200-$4,000)/(13000+1000) = $18,200/14000 => $1.30

Polypropylene: = $10,400/13000 = $0.80

3. Cost of 13,000 bottles completed and transferred:

Materials: 13,000 X ($2.90 + $1.30 + $0.80) = $ 65,000

Conversion costs: 13,000 X $4.60 = $ 59,800

Total Cost = $124,800

4. Cost of 3,000 units formed but not assembled (first stage):

Materials (only cullets): 3,000 X $2.90 = $8,700

Conversion costs: 3,000 X 50% X $4.60 = $6,900

Total Cost = $15,600

5. Cost of 1,000 units assembled but not finished (second stage):

Materials (cullets and silicone): 1,000 X ($2.90 + $1.30) = $4,200

Conversion costs: 1,000 X 90% X $4.60 = $ 4,140

Total Cost = $8,340

ekkarill92 answered 1 year ago

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