Question

Cost of Units Transferred Out and Ending Work in Process

The costs per equivalent unit of direct materials and conversion in the Rolling Department of Oak Ridge Steel Company are $0.80 and $0.45, respectively. The equivalent units to be assigned costs are as follows:

	Equivalent Units
	Direct Materials		Conversion
Inventory in process, July 1	0		4,900
Started and completed during July	61,000		61,000
Transferred out of Rolling (completed)	61,000		65,900
Inventory in process, July 31	4,000		2,400
Total units to be assigned costs	65,000		68,300

The beginning work in process inventory on July 1 had a cost of $3,140. Determine the cost of completed and transferred-out production, the ending work in process inventory, and the total costs assigned by the Rolling Department.

Completed and transferred-out production	$
Inventory in process, ending	$
Total costs assigned by the Rolling Department	$

Answer 1

Solution

Completed and transferred-out production	$ 81,595
Inventory in process, ending	$ 4,280
Total costs assigned by the Rolling Department	$ 85,875

Working

STEP 1
Cost per Equivalent Units AND Cost to be accounted for
	Material		Conversion		TOTAL
Cost incurred in Current Period	$ 52,000		$ 30,735		$ 82,735
Total Equivalent Units	65,000		68,300
Cost per Equivalent Units	$ 0.80		$ 0.45		$ 1.25
Cost of Beginning WIP					$ 3,140
Total cost to be accounted for					$ 85,875

.

STEP 2
Cost report [Including Reconciliation]
	Cost of	Units Transferred		65,900.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Units Transferred	TOTAL
A	From Beginning WIP:
	Material	-	$ 0.80	$ 0
	Conversion	4,900	$ 0.45	$ 2,205	$ 2,205
B	From units started & completed
	Material	61,000	$ 0.80	$ 48,800
	Conversion	61,000	$ 0.45	$ 27,450	$ 76,250
C=A+B	Total				$ 78,455
D	Cost of Beginning WIP				$ 3,140
E=C+D	Total Cost of Units transferred				$             81,595.00
	Cost of	Ending WIP		4,000.00	units
		Equivalent Units [Step 2]	Cost per Equivalent Units [Step 3]	Cost of Ending WIP	TOTAL
F	Material	4,000	$ 0.80	$ 3,200
G	Conversion	2,400	$ 0.45	$ 1,080
H = F + G	Total Cost of Ending WIP				$ 4,280
I = E + H	Total Cost accounted for				$ 85,875
J	Rounding Off Differences				$ 0
K = I + J	Total cost to be accounted for [equals to computed in STEP 3]				$ 85,875