In: Accounting
1.) AB Company has the following production information available for March:
Total materials costs $147,000
Equivalent number of complete units of materials 15,000
Total conversion costs $ 75,000
Equivalent number of complete units of conversion costs 12,000
The total manufacturing cost per unit (rounded to nearest cent) is closest to:
A. $6.25
B. $9.80
C. $16.05
D. $8.22
2.) ABD Company, materials purchases and uses during the first quarter are as follows:
Jan. 11, purchased 500 units at $15.00
Feb. 12, purchased 900 units at $13.00
Mar. 18, purchased 200 units at $16.00
Total amount of materials used during the quarters was 1,400 units. If the company applies the average cost method for its inventory valuation. The ending inventory value is closest to:
A. $2,800
B. $3,000
C. $3,200
D. $2,600
1)
Total material cost = $147000
Equivalent number of complete units of materials = 15,000
Material cost per unit = Total material cost/Equivalent number of complete units of materials
= $147000 / 15000 = $9.8
Equivalent number of complete units of conversion costs = 12,000
Total material cost for completed units = Material cost per unit x Completed units
= $9.8 x 12000 = $117600
Total manufacturing costs per uniit =
Total material cost for completed units + Total conversion cost
= $117600 + $75000 = $192600
Equivalent number of complete units = 12000
Total manufacturing cost per unit = Total manufacturing costs per uniit / Equivalent number of complete units
= $192600 / 12000 = $16.05
Answer is C. $16.05
2)
Total number of units purchased = 500 + 900 + 200 = 1600 units
Number of units used during the quarter = 1400 units
Ending inventory in units = 1600 units - 1400 units = 200 units
Average cost per unit =
Total cost of purchases / Total number of units purchased
= 500 x $15 + 900 x $13 + 200 x $16 / 1600
= $7500 + $11700 + $3200 / 1600
= $22400/1600 = $14
Ending inventory value = Average cost per unit x Ending inventory in units
= $14 x 200 units = $2800
Answer is A. $2,800