Question

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Dirt Cleaners, Inc. has the following production data for January: Transferred out 50,000 units Ending work...

Dirt Cleaners, Inc. has the following production data for January:

Transferred out 50,000 units

Ending work in process 6,000 units


The units in ending work in process are 100% complete for materials and 60% complete for conversion costs. There is no beginning work in process. Materials cost is $10 per unit and conversion costs are $15 per unit.


Instructions

Determine the costs to be assigned to the (a) units transferred out and (b) the units in ending work in process.

Solutions

Expert Solution

Part (a)

Cost to be assigned to the units transferred out-

Total units transferred out = 50,000 units

(i) Material Cost of units transferred out- 50,000 units* $10 per unit = $ 500,000

(ii) Conversion Costs of units transferred out- 50,000 units* $ 15 per unit = $ 750,000

(iii) Total costs to be assigned to the units transferred out- (i)+(ii) = $ 1,250,000

Part (b)

Costs to be assigned to the units in ending work in progress-

  • Calculation of equivalent number of units-

Equivalent number of units in respect of material- 6,000 units* 100% = 6,000 units

Equivalent number of units in respect of conversion costs- 6,000 units* 60% = 3,600 units

  • Calculation of costs-

(i)  Material Cost of units in ending work in process- 6,000 units* $10 per unit = $ 60,000

(ii) Conversion Costs of units in ending work in process- 3,600 units* $15 per unit = $ 54,000

(iii) Total Cost to be assigned to the units in ending work in progress- (i)+(ii) = $ 114,000

ekkarill92 answered 1 year ago
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