Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker,...

Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures the tents in two departments: Stitching and Customizing. All four models are processed initially in Stitching where all material is assembled and sewn into a basic tent. The Rookie model is then transferred to finished goods. After processing in Stitching, the other three models are transferred to Customizing for additional add-ons, and then transferred to finished goods.

There were no beginning work-in-process inventories on August 1. Data for August are shown in the following table. Ending work in process is 30 percent complete in Stitching and 25 percent complete in Customizing. Conversion costs are allocated based on the number of equivalent units processed in each department.

Total			Rookie			Novice			Hiker			Expert
Units started					640			520			460			250
Units completed in Stitching					575			490			405			175
Units completed in Customizing								480			380			145
Materials	$	64,340		$	20,480		$	17,680		$	15,180		$	11,000
Conversion costs:
Stitching	$	52,260
Customizing		28,000
Total conversion costs	$	80,260

Required:

a. What is the unit cost of each model transferred to finished goods in August?

b. What is the balance of the Work-in-Process Inventory on August 31 for Stitching? For Customizing?

Product	Unit Cost
Rookie
Novice
Hiker
Expert

	Work-in-Process Inventory
Stitching
Customizing

Solutions

Expert Solution

Final Answer:
	Req A
	Unit cost
	Rookie	62.52
	Novice	91.93
	Hiker	90.93
	Expert	101.93
	Req b
	Work In Process Inventory
	Stitching	10,275
	Customizing	4,914

Working Notes: (Req A)

Product	Material Cost (1)	No. of Units (2)
Rookie	20480	640
Novice	17680	520
Hiker	15180	460
Expert	11000	250

Conversion cost per equivalent Units - Stitching

	Physical Units	Conversion cost
		Eq. Units
Flow of Units:
Units to be accounted for:
Beginning WIP inventory	0
Units started this period	1870
Total Units accounted for:	1870

Units accounted for:
Completed and transferred out	1645	1645
Units in ending Inventory	225	67.5
Total Units accounted for:	1870	1712.5

	Total	Conversion Cost
Cost to be accounted for:
Cost in beginning WIP	0	0
Current Period costs	52260	52260
Total cost to be accounted for:	52260	52260
Cost per equivalent Units
Conversion cost		30.52

Conversion cost per equivalent Units - Customizing

	Physical Units	Conversion cost
		Eq. Units
Flow of Units:
Units to be accounted for:
Beginning WIP inventory	0
Units started this period	1070
Total Units accounted for:	1070

Units accounted for:
Completed and transferred out	1005	1005
Units in ending Inventory	65	16.25
Total Units accounted for:	1070	1021.25

	Total	Conversion Cost
Cost to be accounted for:
Cost in beginning WIP	0	0
Current Period costs	28000	28000
Total cost to be accounted for:	28000	28000
Cost per equivalent Units
Conversion cost		27.42

ekkarill92 answered 2 years ago

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Subjects

Cost of Units Transferred to Finished Goods	Rookie	Novice	Hiker	Expert
Unit Material Cost	32	34	33	44
Stitching Department Conversion cost	30.52	30.52	30.52	30.52
Customizing Department Conversion cost		27.42	27.42	27.42

Total	62.52	91.93	90.93	101.93

Working Note(Req 2:)
WIP Ending Inventory balance

Stitching Department
Material Cost	No. of Units	Unit Cost	Total Cost
Rookie	65	32	2,080
Novice	30	34	1,020
Hiker	55	33	1,815
Expert	75	44	3,300

Total material cost			8,215
Conversion costs	67.5	30.52	2,060

Total			10,275

Customising Department

Material Cost	No. of Units	Unit Cost	Total Cost
Novice	10	34	340
Hiker	25	33	825
Expert	30	44	1,320

Total material cost			2,485

Conversion costs:
From Stitching	65	30.52	1,984
From Customizing	16.25	27.42	446
Total Conversion Cost			2,429

Total			4,914