Tempe Manufacturing Company makes a single product that is produced on a continu

Question

Tempe Manufacturing Company makes a single product that is produced on a continuous basis in one department. All materials are added at the beginning of production. The total cost per equivalent unit in process in March was $5.80, consisting of $4.20 for materials and $1.60 for conversion. During the month, 9,000 units of product were transferred to finished goods inventory; on March 31, 3,500 units were in process, 10 percent converted. The company uses weighted average costing.

(a) Determine the cost of goods transferred to finished goods inventory.

(b) Determine the cost of the ending work-in-process inventory.

(c) What was the total cost of the beginning work-in-process inventory plus the current manufacturing costs?

Explanation / Answer

a) Cost of goods transfered to finished goods are

Units trasfered X Total Equivalent unit cost

= 9,000 X 5.80

= $52,200

b) Cost of ending inventory

Material = Closing units X %age of completion X Unit cost

= 3,500 X 100% x 4,20

= $ 14,700

Conversion = Closing units X %age of completion X Unit cost

= 3,500 x 10% X 1.60

= $ 560

Total Cost of ending WIP = $14,700 + $560 = $ 15,260

c) Total Cost he beginning work-in-process inventory plus the current manufacturing costs

= $ 52,200 + $ 15,260

= $ 67,460

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