Exercise 16-3 The ledger of Custer Company has the following work in process acc

Question

Exercise 16-3 The ledger of Custer Company has the following work in process account. Work in Process—Painting 5/1 Balance 4,550 5/31 Transferred out ? 5/31 Materials 7,050 5/31 Labor 2,930 5/31 Overhead 1,550 5/31 Balance ? Production records show that there were 540 units in the beginning inventory, 30% complete, 1,450 units started, and 1,530 units transferred out. The beginning work in process had materials cost of $2,850 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), (b) and (c) (a) How many units are in process on May 31? Work in process, May 31 units (b) What be 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) How many units are in process at May 31? Work in process May .1                  540 Started into production              1,450 Total units to be accounted for              1,990 Less: Transferred out            (1,530) Work in process, May 31                  460 (b) What is the unit materials cost for May? Units Units transferred out              1,530 Work in process, May 31                  460              1,990 Cost Work in process, May 1 $          2,850 Costs added: Material $          7,050 Total Cost $          9,900 Unit Material Cost 9900/1990 $            4.97 (c) What is the unit conversion cost for May? Units Units transferred out              1,530 Work in process, May 31                  184 (460 X 40%)              1,714 Work in process, May 1 $          1,700 Costs added: Labor $          2,930 Overhead $          1,550 Total Cost $          6,180 Unit Conversion Cost $            3.61 (d) What is the total cost of units transferred out in May? Material ( 1,530 X 4.97)              7,612 Conversion Cost (1,530 X3.61)              5,517 Total Cost of transferred out            13,128 (e) What is the cost of the May 31 inventory? Material ( 460 X 4.97)              2,288 Conversion Cost (184 X 3.61)                  664 Total Cost of May 31 inventory              2,953

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