Question

Exercise 16-3

The ledger of American Company has the following work in process account.

Work in Process—Painting

5/1         Balance                3,890     5/31      Transferred out ?

5/31       Materials             5,290                                    

5/31       Labor     4,130                                    

5/31       Overhead            1,380                                    

5/31       Balance                ?                                             

Production records show that there were 440 units in the beginning inventory, 30% complete, 1,700 units started, and 1,410 units transferred out. The beginning work in process had materials cost of $2,240 and conversion costs of $1,650. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

               

How many units are in process at May 31?

Work in process, May 31                              

730

units

               

What is the unit materials cost for May? (Round unit cost to 3 decimal places, e.g. 2.257.)

The unit materials cost for May                 

$

3590

               

What is the unit conversion cost for May? (Round unit cost to 3 decimal places, e.g. 2.257.)

The unit conversion cost for May                             

$

What is the total cost of units transferred out in May? (Round answer to 0 decimal places, e.g. 1,225.)

The total cost of units transferred out in May                     

$

               

What is the cost of the May 31 inventory? (Round answer to 0 decimal places, e.g. 1,225.)

Work in process                               

$

Answer 1

The unit materials cost for May                 

$3.519

The unit conversion cost for May                             

$4.207

The total cost of units transferred out in May                     

$ 10,893

Work in process

$ 3,797

Working note

		Units
Reconciliation of Units
A	Opening WIP	440
B	Introduced	1,700
C=A+B	TOTAL	2,140
D	Transferred	1,410
E=C-D	Closing WIP	730

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,410	100%	1,410	100%	1,410
Closing WIP	730	100%	730	40%	292
Total	2,140	Total	2,140	Total	1,702

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$       2,240	$             1,650	$                3,890
Cost incurred during period	$       5,290	$             5,510	$             10,800
Total Cost to be accounted for	$       7,530	$             7,160	$             14,690
Total Equivalent Units	2,140	1,702
Cost per Equivalent Units	$       3.519	$             4.207

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$                3.519	730	$             2,569	1,410	$             4,961
Conversion Cost	$                4.207	292	$             1,228	1,410	$             5,932
		TOTAL	$             3,797	TOTAL	$          10,893

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