The Cutting Department of Groneman Manufacturing has the following production an

Question

The Cutting Department of Groneman Manufacturing has the following production and cost data for July.
Production

Costs

1. Transferred out 9,000 units. Beginning work in process $ -0-
2. Started 3,000 units that are 60% complete as Materials 45,000
to conversion costs and 100% complete as Labor 16,200
to materials at July 31. Manufacturing overhead 18,900

Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process.

Determine the equivalent units of production for (1) materials and (2) conversion costs.

Compute unit costs and prepare a cost reconciliation schedule. (Round unit costs to 2 decimal places, e.g. 10.50. Use rounded amounts for future calculations. Round other answers to 0 decimal places, e.g. 125.)

Explanation / Answer

Total Material Costs = $45000

Total equivalence unit = 9000 + 3000 x 0.6 = 10800 EU

Cost per EU = 45000/10800 = $4.167

Total Conversion Costs = 16200 + 18900 = $35100

Total Equivalent units = 9000 + 3000 = 12000 EU

Cost per equivalent units = 35100 / 12000 = $2.925/EU

Total Cost for Finished Good = 9000 x 2.925 + 9000 x 4.167 = = 26325 + 37500 = $63825

Total Cost for Ending Work in Progress = 3000 x 2.925 + 3000 x 0.6 x 4.167 = 8775 + 7500 = $16275

COST PER UNIT OF FINISHED GOOD = 63825 /9000 = $7.09

Hope this helps!

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