Question

Everglades Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor) with a cost of $124,800 materials and $104,500 conversion. 58,000 units were started into production during the month with material costs of $1,537,000 and $2,124,375 of conversion costs. The ending inventory of 6,000 chairs was 100% complete as to materials and 40% complete as to labor. Everglades uses weighted-average costing.
Use 4 decimal places in the calculations
a. Compute the equivalent units of produciton for each unit.
b. Compute the cost per unit.
c. Compute thethe cost transferred out to finished goods.
d. Compute the ending work-in-process inventory balance.

Answer 1

Answer:

a. Compute the equivalent units of production for each unit.

Materials = 63,000 units

Conversion = 59,400 units

b. Compute the cost per unit.

Total Cost per unit  = $63.90

c. Compute the cost transferred out to finished goods.

cost transferred out to finished goods =  $3,642,300

d. Compute the ending work-in-process inventory balance.

ending work-in-process inventory balance =$248,328

Explanation:

a. Compute the equivalent units of production for each unit.

Materials

Ending Work In Process Units (100%)          6,000

Units Completed and Transferred (100%)  57,000

Total                                                              63,000

Units Completed and Transferred = 5,000+58,000-6,000=57,000

Conversion

Ending Work In Process Units (40%)            2,400

Units Completed and Transferred (100%)  57,000

Total                                                              59,400

Units Completed and Transferred = 5,000+58,000-6,000=57,000

b. Compute the cost per unit.

Materials

Cost per unit = Total Cost / Total Equivalent Units

                      =($124,800 +$1,537,000)/ 63,000

                      = $26.38

Conversion

Cost per unit = Total Cost / Total Equivalent Units

                      =($104,500+$2,124,375)/ 59,400

                      = $37.52

Total Cost per unit = $26.38 +  $37.52 = $63.90

c. Compute the cost transferred out to finished goods.

cost transferred out to finished goods = 57,000×$63.90

                                                                = $3,642,300

d. Compute the ending work-in-process inventory balance.

ending work-in-process inventory balance

Materials (6,000×$26.38)     = $158,280

Conversion (2,400×$37.52)  = $ 90,048

Total                                        =$248,328