In the month of April, a department had 500 units in the beginning work in proce

Question

In the month of April, a department had 500 units in the beginning work in process inventory that were 60% complete. These units had $30,000 of materials costs and $22,500 of conversion costs. Materials are added at the beginning of the process and conversion costs are added uniformly throughout the process. During April, 10,000 units were completed and transferred to the finished goods inventory and there were 2,000 units that were 25% complete in the ending work in process inventory on April 30. During April, manufacturing costs charged to the department were: Materials $690,000; Conversion costs $765,000. The cost assigned to the units transferred to finished goods during April was Question 14 options: $1,410,000 $1,357,500 $1,342,000 $1,350,000

Explanation / Answer

Calculation of cost assigned to units transferred to Finished Goods during April Particulars No.of Units % of Completion for Material Equivalent Units of Production % of Completion for Coversion cost Equivalent Units of Production Units Completed & trf. 10000 100% 10000 100% 10000 Closing WIP 2000 100% 2000 25% 500 Total 12000 10500 Total Cost Coversion Incurred Particulars Material Conversion Opening WIP 30000 22500 During April 690000 765000 Total Cost 720000 787500 Cost per Unit of Equivalent Units of production = Total cost incurred / Equivalent Units of Production Material Cost per Unit of Equivalent Units of production = 720000 / 12000 = 60 Conversion Cost per Unit of Equivalent Units of production = 787500 / 10500 = 75 Cost assigned to Finished goods trf = (10000*60) + (10000*75) = $1350000

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