Question

Corporation produces a semiconductor chip used on communications. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. Big Band had no inventory at the start of June. During the​ month, it incurred direct materials costs of $ 935 comma 750 and conversion costs of $ 4 comma 554 comma 000. Big Band started 475 comma 000 chips and completed 425 comma 000 of them in June. Ending inventory was 50​% complete as to conversion costs. Compute​ (a) the equivalent units of work done in​ June, and​ (b) the total manufacturing cost per chip. Allocate the total costs between the completed chips and those in ending inventory.

Answer 1

Answer:

Equivalents Units Of Production   Materials=  475,000  

Conversion Costs 450,000    

Cost of Completed Units =$ 5138250

Cost of Units in the Ending Inventory           $ 604,500

Explanation:

Direct materials costs of $ 935,750

Conversion costs of $ 4,554,000

Total Manufacturing Costs  $ 5489,750

                           Units                 % of Completion                EUP

                                                D.M         C.C                   D.M         C.C

         

Units completed 425,000     100           100              425,000      425,000

Ending Inventory  50,000      100           50                50,000        25000

Total Units Of Production                                        475,000        450,000                

Direct Materials= $ 935,750/ 475000= $ 1.97

Conversion Costs = $ 4,554,000/ 450,000= $ 10.12

Cost of Completed Units =$ 5138250

Direct Materials = 425,000 * 1.97= $ 837250

Conversion Costs = 425,000 *10.12= $ 4301,000

Total Cost of Manufacturing Units= $ 5138250

Cost of Units in the Ending Inventory           $ 604,500    

Direct Materials = 50,000 * 1.97= $ 98,500

Conversion Costs = 50,000 * 10.12= 506000

Total Costs                  $ 604,500