Question

The Blending Department of Luongo Company has the following cost and production data for the month of April.

Costs:
Work in process, April 1
Direct materials: 100% complete		$106,000
Conversion costs: 20% complete		74,200
Cost of work in process, April 1		$180,200
Costs incurred during production in April
Direct materials		$848,000
Conversion costs		386,900
Costs incurred in April		$1,234,900

Units transferred out totaled 18,020. Ending work in process was 1,060 units that are 100% complete as to materials and 40% complete as to conversion costs.

1. Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April.

2. Compute the unit costs for the month.

3. Determine the costs to be assigned to the units transferred out and in ending work in process.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	19,080	18,444

.Unit cost for the month = $75.00

.

Cost assigned to Units Transferred out	$          1,351,500
Cost assigned to Units in Ending Work in process	$                63,600

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	18,020			100%	18,020	100%	18,020
Ending WIP	1,060			100%	1,060	40%	424
Total	19,080			Total	19,080	Total	18,444

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost (A)		$ 106,000	$ 74,200	$ 180,200
Cost incurred during period (B)		$ 848,000	$ 386,900	$ 1,234,900
Total Cost to be accounted for (C=A+B)		$ 954,000	$ 461,100	$ 1,415,100
Total Equivalent Units(D)		19,080	18,444
Cost per Equivalent Units (E=C/D)		$                 50.00	$                   25.00	$             75.00

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 50.00	1,060	$          53,000.00	18,020	$        901,000.00
Conversion cost	$ 25.00	424	$          10,600.00	18,020	$        450,500.00
TOTAL	$ 1,415,100	TOTAL	$ 63,600	TOTAL	$ 1,351,500