Question

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

Work in Process—Painting
5/1	Balance	3,690	5/31	Transferred out	?
5/31	Materials	6,840
5/31	Labor	4,230
5/31	Overhead	1,280
5/31	Balance	?

Production records show that there were 480 units in the beginning inventory, 30% complete, 1,760 units started, and 1,410 units transferred out. The beginning work in process had materials cost of $2,840 and conversion costs of $850. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

Answer 1

	Work in Process- Painting
	5/1	Balance	3,690	5/31	Transferred out	11,241
	5/31	Materials	6,840
	5/31	Labor	4,230
	5/31	Overhead	1,280
	5/31	Balance	4,799
Working:
a.	Equivalent units:
			Material		Conversion
		Physical Units	% of completion	Equivalent Units	% of completion	Equivalent Units
	Units Completed	1410	100%	1410	100%	1410
	Ending units	830	100%	830	40%	332
	Total	2240		2240		1742
b.			Materials	Conversion Costs	Total
	Beginning Costs		2,840	850	3,690
	Costs incurred during the period		6,840	5,510	12,350
	Total Costs		9,680	6,360	16,040
	÷ Equivalent Units of production		2240	1742
	Cost per equivalent units		$                      4.32	$                       3.65
c.	Units Transferred out:		Equivalent units	Cost per equivalent unit	Total Costs
	Materials		1410	$                       4.32	$                   6,093
	Conversion		1410	$                       3.65	$                   5,148	$                 11,241
	Ending Units:
	Materials		830	$                       4.32	$                   3,587
	Conversion		332	$                       3.65	$                   1,212	$                   4,799
						$                 16,040