Question

Sanchez & Company produces paints. On July 1st it had no work in progress inventory. It starts reduction of 150,000 gallons of paint in July and completes 120000 gallons. The cost of the resources used by Sanchez in July consists of the following:materials- $137000Conversion Costs- $175000the production supervisor estimated that the ending work in progress is 16% complete compute the cost of paint transferred to finished goods in their mouth and work-in-progress ending inventory as of July 31st.cost of paint transferred to finished goods__________work-in-process ending inventory_________

Answer 1

Answer:

transferred-out:    $  300,000

ending inventory  $     12,000

Explanation:

Stareted:      150,000 gallons

Completed: (120,000) gallons

Ending WIP    30,000 gallons

Ending WIP: 16% complete

Cost:

materials             137,000

conversion cost 175,000

Total cost:           312,000

We aren't given with an indicator about the 16% is for materials or conversion, so we assume is fro both cost.

Equivalent units: 120,000 complete + 30,000 x 16% = 124,800

Cost per equivalent unit: $312,000 / 124,800 = $2.5 per unit

transferred-out: 120,000 gallon x $ 2.5 per gallon = $300,000

ending inventory 30,000 gallon x 16% completion x $ 2.5 per gallon = $12,000