Completion of question:
a) How many units are in process at May 31
b) What is the units material cost for May?
c) What is the unit conversion cost for May
d) What is the total cost of units transferred out in May
e) What is the cost of the May 31 inventory.
Answer:
American Company
a) Units are in process at May 31
: 800 units
b) Units material cost for May: $8,970 (5,930 + 3,040)
c) Unit conversion cost for May
: $7,098 (6,348 + 750)
d) Total cost of units transferred out in May: $13,243
e) The cost of the May 31 inventory: $2,825
Explanation:
a) Data:
Work in Process—Painting
5/1 Balance 3,790
5/31 Transferred out ? = $13,243
5/31 Materials 5,930
5/31 Labor 4,068
5/31 Overhead 2,280
5/31 Balance ? = $2,825
b) Production
Beginning WIP = 600 units
Units started 1,700
Total units 2,300
Transferred out 1,500
Ending WIP 800
c) Calculation of Equivalent units and costs:
Beginning work in process inventory
Units Equivalent unit Cost
Beginning WIP = 600 30% 180 3,790
Units started 1,700:
Materials 5,930
Labor 4,068
Overhead 2,280
Total units 2,300 $16,068
Transferred out 1,500 100% 1,500 $13,243
Ending WIP 800 40% 320 $2,825
Equivalent unit of ending WIP = 320 units (800vx 40%)
Cost per equivalent unit = $16,068/1,820 = $8.8286
Total cost of units transferred out = $13,243 (1,500 x $8.8286)
Cost of Ending work in process = $2,825 (320 x $8.8286)
d) Equivalent units and cost per equivalent units are calculations generated from a method of apportioning the cost of production to the finished goods and the ending work in process based on the degree or percentage of completion of the units.
