Exercise 16-3 Work in Process—Painting (a) How many units are in process at May
ID: 2458806 • Letter: E
Question
Exercise 16-3
Work in Process—Painting
(a) How many units are in process at May 31?
Exercise 16-3
The ledger of Custer Company has the following work in process account.Work in Process—Painting
5/1 Balance 4,730 5/31 Transferred out ? 5/31 Materials 5,380 5/31 Labor 2,910 5/31 Overhead 1,420 5/31 Balance ?Production records show that there were 430 units in the beginning inventory, 30% complete, 1,560 units started, and 1,540 units transferred out. The beginning work in process had materials cost of $3,030 and conversion costs of $1,700. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.
(a) How many units are in process at May 31?
(b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)
The unit materials cost for May
$
(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)
The unit conversion cost for May
$
Explanation / Answer
a)Work in process at end = Beginning + started during the year -transfered out
= 430 + 1560 -1540
= 450 units
b)Equivalent unit for may = 1560 units
Total material cost = 5380 / 1560 =$ 3.45 per unit
c)Assuming first in first out method is used.
Equivalent unit = (430 *.70) +[1540 -430 )100%] + (450* .40)
= 301+ 1110+180
= 1591 units
Cost per equivalent unit = (2910 + 1420 ) / 1591
= 4330 / 1591
= $ 2.72 per unit
cost of units transfered out :
Material cost - $ 3030 + (1540-430)* 3.45 = $3030+3829.5 = $ 6859.50
Conversion cost = 1700 + [(430 *.70 )+ (1540-430)1 ] *2.72
= 1700 + [301 + 1110]*2.72
= 1700 + 3837.92
=5537.92
cost of ending inventory = Total cost in WIP -Cost of transfered out
= (4730+5380+2910+1420)-6859.5-5537.92
= 2042.58
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