Question

In: Accounting

In its first month of operations (May 2019), Holland Company’s Department 1 incurred charges of $72,000...

In its first month of operations (May 2019), Holland Company’s Department 1 incurred charges of $72,000 for direct materials (9,000 units), $38,700 for direct labor, and $13,950 for manufacturing overhead. At month end, 7,500 units had been finished and transferred out. Those remaining were finished with respect to material but only 40% finished with respect to conversion.

Assuming Holland uses the weighted average method and that materials are added at the beginning of the process and conversion occurs evenly, compute the following:

  1. The equivalent units for material and conversion.

  2. The cost per equivalent unit for material and conversion.

  3. The total cost assigned to the units transferred out.

  4. The total cost assigned to the ending inventory

    In its first month of operations (May 2019), Holland Company’s Department 1 incurred charges of $72,000 for direct materials (9,000 units), $38,700 for direct labor, and $13,950 for manufacturing overhead. At month end, 7,500 units had been finished and transferred out. Those remaining were finished with respect to material but only 40% finished with respect to conversion.

    Assuming Holland uses the weighted average method and that materials are added at the beginning of the process and conversion occurs evenly, compute the following

  5. The equivalent units for material and conversion.

  6. The cost per equivalent unit for material and conversion.

  7. The total cost assigned to the units transferred out.

  8. The total cost assigned to the ending inventory

Solutions

Expert Solution

Answer:

  1. The equivalent units for material and conversion.= 9,000 for material and 8,100 for conversion.

  2. The cost per equivalent unit for material and conversion. = $ 8.00 for material and $ 6.50 for conversion.

  3. The total cost assigned to the units transferred out. = $ 108,750

  4. The total cost assigned to the ending inventory = $ 15,900.

Working note:

Statement of Equivalent Production
Input Particulars Output Material Conversion cost
% Units % Units
    9,000.00 Put and processed     7,500.00 100% 7,500.00 100% 7,500.00
Closing stock     1,500.00 100% 1,500.00 40%      600.00
    9,000.00 Total     9,000.00 9,000.00 8,100.00
Costs:
Opening $                      -   $                      -  
May $             72,000 $             52,650
Total $             72,000 $             52,650
Cost per unit $                 8.00 $                 6.50
Value of Put and processed
Material $           60,000.00
Conversion cost $           48,750.00
Total $         108,750.00
Value of Closing Stock
Material $           12,000.00
Conversion cost $             3,900.00
Total $           15,900.00

In case of any doubt, please comment.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

At the beginning of its first year of operations on January 1, 2019, Blue Company’s accounts...
At the beginning of its first year of operations on January 1, 2019, Blue Company’s accounts show the following. Mohammed 160,000 SR Ali 80,000 SR Khalid 50,000 SR The net income or net loss for 2019 has not been closed to the partners’ capital accounts. Required: Journalize the entry to record the division of net income for 2019 under each of the following independent assumptions (you can prepare a schedule showing the distribution of net income to help you in...
1）ABC Company entered into the following transactions during May, its first month of operations: May 1:...
1）ABC Company entered into the following transactions during May, its first month of operations: May 1: ABC Company sold common stock to owners in the amount of $200,000. May 1: ABC Company paid $36,000 cash for office rent for May, June, and July. May 3: ABC Company purchased a parcel of land costing $60,000 by paying $25,000 in cash and agreeing to pay the remainder within sixty days. May 9: ABC Company provided $23,000 of services to a customer. The...
1. A business operated at 100% of capacity during its first month and incurred the following...
1. A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (17,100 units):     Direct materials $171,800     Direct labor 237,200     Variable factory overhead 264,600     Fixed factory overhead 97,600 $771,200 Operating expenses:     Variable operating expenses $127,300     Fixed operating expenses 40,600 167,900 If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a.$84,305 b.$81,179 c.$98,853 d.$70,902 2. A...
41. 1 . a business operated at 100% of capacity during its first month and incurred...
41. 1 . a business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,200 units): Direct materials $177,700 Direct labor 221,800 Variable factory overhead 268,100 Fixed factory overhead 92,500 $760,100 Operating expenses: Variable operating expenses $132,800 Fixed operating expenses 40,800 173,600 If 1,900 units remain unsold at the end of the month and sales total $1,081,000 for the month, what would be the amount of income from operations reported on the absorption...
Tony started “Dream Consulting” on 1 July 2019. During the first month of operations, the business...
Tony started “Dream Consulting” on 1 July 2019. During the first month of operations, the business completed the following transactions. 1 July Tony invested $50,000 cash in the business. 1 July Paid office rent of $48,000 for two years. 1 July Paid $1,200 for fire insurance for one year. 3 July Purchased office supplies for $500 on account. 5 July Paid a downpayment of 40% of $10,000 for office furniture from DH Furnishings. The remaining 60% to be paid upon...
13. A. A business operated at 100% of capacity during its first month and incurred the...
13. A. A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,700 units):     Direct materials $172,500     Direct labor 232,400     Variable factory overhead 259,600     Fixed factory overhead 97,500 $762,000 Operating expenses:     Variable operating expenses $134,200     Fixed operating expenses 46,900 181,100 If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a. $51,360 b. $61,735 c....
1. In its first month of operations, Pharoah Company made three purchases of merchandise in the...
1. In its first month of operations, Pharoah Company made three purchases of merchandise in the following sequence: (1) 155 units at $10, (2) 560 units at $11, and (3) 135 units at $12. a. Calculate the average unit cost. 2. In its first month of operations, Wildhorse Co. made three purchases of merchandise in the following sequence: (1) 190 units at $10, (2) 540 units at $11, and (3) 100 units at $12. a. Calculate the average unit cost....
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,600 units): Direct materials $172,100 Direct labor 234,800 Variable factory overhead 267,600 Fixed factory overhead 100,300 $774,800 Operating expenses: Variable operating expenses $131,500 Fixed operating expenses 46,900 178,400 If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? The actual price for a product was...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,100 units): Direct materials $171,800 Direct labor 220,400 Variable factory overhead 256,100 Fixed factory overhead 102,000 $750,300 Operating expenses: Variable operating expenses $128,600 Fixed operating expenses 43,000 171,600 If 1,600 units remain unsold at the end of the month and sales total $1,143,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units):   Direct materials $170,000   Direct labor 360,000   Variable factory overhead 190,000   Fixed factory overhead     50,000 $770,000 Operating expenses:   Variable operating expenses $ 60,000   Fixed operating expenses     18,000 78,000 If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a.$41,500 b.$42,800 c.$38,500 d.$36,000
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT