Exercise 16-3 The ledger of American Company has the following work in process a

Question

Exercise 16-3 The ledger of American Company has the following work in process account.

Work in Process—Painting

5/1 Balance 3,890 5/31 Transferred out ?

5/31 Materials 6,940

5/31 Labor 3,530

5/31 Overhead 1,880

5/31 Balance ?

Production records show that there were 580 units in the beginning inventory, 30% complete, 1,780 units started, and 1,570 units transferred out. The beginning work in process had materials cost of $2,640 and conversion costs of $1,250. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

What is the unit conversion cost for May? (Round unit cost to 3 decimal places, e.g. 2.257.)

What is the total cost of units transferred out in May? (Round answer to 0 decimal places, e.g. 1,225.)

What is the cost of the May 31 inventory? (Round answer to 0 decimal places, e.g. 1,225.)

Thank you !

Explanation / Answer

cost of the May 31 inventory

1 Work in process, May 1 580 Started into production 1,780 Total units to be accounted for 2,360 Less: Transferred out 1,570 Work in process, May 31 790 units Equivalent Units Materials Conversion Cost Units transferred out 1,570 1,570 Work in process, May 31 790 316 790*100%,790*40% 2,360 1,886 Materials Conversion Cost Work in process, May 1 2640 1250 Costs Added 6940 5410 Total Material Cost 9580 6660 Equivalent units 2,360 1,886 Unit costs 4.059 3.531 b Transferred out
1570*(4.059+3.531) 11917

cost of the May 31 inventory

Work in process Materials
790*4.059 3207    Conversion costs
316*3.531 1116 4323

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