The Blending Department of Luongo Company has the following cost and production

Question

The Blending Department of Luongo Company has the following cost and production data for the month of April.

Units transferred out totaled 17,000. Ending work in process was 1,000 units that are 100% complete as to materials and 40% complete as to conversion costs.

Instructions

(a)  

Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April.

(b)  

Compute the unit costs for the month.

(c)  

Determine the costs to be assigned to the units transferred out and in ending work in process.

Costs: Work in process, April 1 Direct materials: 100% complete $100,000 Conversion costs: 20% complete 70,000 Cost of work in process, April 1 $170,000 Costs incurred during production in April Direct materials $??800,000 Conversion costs 365,000 Costs incurred in April $1,165,000

Explanation / Answer

a) Equivalent unit of material = 17000+(1000*100%) = 18000 units

Equivalent unit of conversion cost = 17000+(1000*40%) = 17400 units

b) Cost per equivalent unit of material = (100000+800000)/18000 = 50 per equivalent unit

Cost per equivalent unit of conversion = (70000+365000)/17400 = 25 per equivalent unit

Unit cost = (50+25) = 75 per unit

c) Cost of units transferred out = (50+25)*17000 = 1275000

Cost of ending work in process = (1000*50+400*25) = 60000

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