Question

The Polishing Department of Marigold Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,740 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 46,900; ending inventory of 7,800 units 10% complete as to conversion costs. Manufacturing costs: Beginning inventory costs, comprised of $22,100 of materials and $37,103 of conversion costs; materials costs added in Polishing during the month, $221,100; labor and overhead applied in Polishing during the month, $127,100 and $258,240, respectively.
Required:
a. Compute the equivalent units of production for materials and conversion costs for the month of september
b. Compute the unit costs for materials and conversion costs for the month.
c. Determine the costs to be assigne to the units transfered out in the process.

Answer 1

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

A).Total Process Unit = Opening Inventory + Started Units During the Period

= 1,740 + 46,900

= 48,640

Transferred Unit Out = Total Process Unit - Closing Inventory Units

= 48,640 - 7,800

= 40,840

Particulars             Material cost  Conversion cost  

Transferred unit out 40,840         40,840

Add: Work in process 7,800 × 100% = 7,800 7,800 × 10% = 780

Equivalent units of production 48,640 41,620

b).Total Material Cost = Opening Inventory of Material Cost + Material Cost Added in Polishing

= $22,100 + $221,100

= $243,200  

Material Cost Per Unit =Total Material Cost ÷ Material Cost Equivalent Units of Production

= $243,200 ÷ 48,640

= $5

Opening inventory cost for conversion = $37,103

During September added cost = $127,100 + $258,240 = $385,340

Total Conversion Cost = During September Added Cost + Opening Inventory Cost for Conversion

= $385,340 + $37,103

= $422,443

Conversion Cost Per Unit =Total Conversion Cost ÷ Conversion Cost Of Equivalent Units Of Production

= $422,443 ÷ $41,620

= $10.15

c. ) Unit Transferred Out in Process = Transferred Units Out × (Material Cost Per Unit + Conversion Cost Per Unit)

= 40,840 × ($5 + $10.15)

= $40,840 × $15.15

= $618,726

Material cost work in process = 7,800 × $5 = $39,000

Conversion cost work in process  = 780 × $10.15 = $7,917

Total cost of work in process = $46,917