Question

Kramer company started its production operations on August 1st. During August, the printing Department completed 17,600 units. There were 4,400 units in ending inventory which were 80% complete with respect to materials and 10% complete with respect to conversion cost. during August, the department accumulated materials cost of 45408 and conversion cost of 76,6700. Required:
a) calculate the cost of the goods transferred out.
b) what is the value of the ending inventory?

Answer 1

Answer:

Costs of goods transferred out is  $ 785,840

Value of ending inventory is  $26,268

Explanation:

The equivalent units of material cost is computed thus:

Completed units  17600*100% =17,600

Ending inventory 4,400*80%    =3,520

Equivalent units                           21,120

material unit cost =Accumulated materials cost/equivalent units

material unit cost=$45,408/21,120

                            =$2.15

Equivalent units of conversion cost is calculated thus:

Completed units 17,600*100%= 17,600

Ending inventory 4,400*10%  =      440

Equivalent units                         18,040

Conversion unit cost=Conversion costs/equivalent units

                                   =$766,700/18,040

                                   =$42.5

Cost of goods transferred out:

Material costs  17,600*100%*$2.15       =$37,840

Conversion costs 17,600*100%*$42.5 =$ 748,000

Total costs                                                $ 785,840

Costs of ending inventory:

Material costs 4,400*80%*$2.15                = $7,568

Conversion costs 4,400*10%*$42.5           =$18,700

Total cost                                                        $26,268

                                   =