Question

Unit Cost and Cost Assignment, Nonuniform Inputs

Loran Inc. had the following equivalent units schedule and cost for its fabrication department during September:

	Materials		Conversion
Units completed	180,000		180,000
Add: Units in ending WIP x Fraction complete	72,000		41,040
(72,000 x 57%)
Equivalent units of output	252,000		221,040
Costs:
Work in process, September 1:
Materials	$147,000
Conversion costs	7,875
Total	$154,875
Current costs:
Materials	$1,080,000
Conversion costs	451,860
Total	$1,531,860

Required:

1. Calculate the unit cost for materials, for conversion, and in total for the fabrication department for September. If required, round your answers to the nearest cent.

Unit materials cost	$
Unit conversion cost	$
Total unit cost	$

2. Calculate the cost of units transferred out and the cost of EWIP. Round unit cost value to the nearest cent in intermediate calculations. If required, round final answers to the nearest dollar.

Cost transferred out	$
Cost of ending work in process

Answer 1

Requirement 1

Unit materials cost	$ 4.87
Unit conversion cost	$ 2.08
Total unit cost	$ 6.95

Requirement 2

Cost transferred out	$ 1,251,000
Cost of ending work in process	$ 436,003

Working

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 147,000	$ 7,875	$ 154,875
Cost incurred during period		$ 1,080,000	$ 451,860	$ 1,531,860
Total Cost to be accounted for		$ 1,227,000	$ 459,735	$ 1,686,735
Total Equivalent Units		252,000	221,040
Cost per Equivalent Units		$                   4.87	$                     2.08	$                6.95

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 4.87	72,000	$        350,640.00	180,000	$        876,600.00
Conversion cost	$ 2.08	41,040	$          85,363.20	180,000	$        374,400.00
TOTAL	$ 1,687,003	TOTAL	$ 436,003	TOTAL	$ 1,251,000