Horton Company uses the average method of process costing. All materials are add

Question

Horton Company uses the average method of process costing. All materials are added at the beginning of processing. The following information was obtained from its assembly department: Units in beginning work-in-process inventory, 800 units; 40% complete as to conversion. Units in ending work-in-process inventory, 400 units, 85% complete as to conversion. Units completed and transferred out to the next department, 11,800 units. Costs in beginning work-in-process inventory: direct materials costs of $ 6,748, and conversion costs of $8, 194.Costs incurred during the month: direct materials costs of $261,652, and conversion costs of $234,606. Prepare a production report to answer the following questions.

A.) Calculate the cost per equivalent unit (cost of one completed unit).

B.) Calculate the cost of the units completed and transferred to the next department.

C.) Calculate the cost of the units in the ending work-in-process inventory.

Explanation / Answer

Direct materials Conversion costs Units completed and transferred out 11800 11800 Ending work-in-process inventory 400 340 Equivalent units 12200 12140 Total costs 268400 242800 Cost per equivalent unit 22 20 A Cost per equivalent unit=22+20-$42 B Cost of the units completed and transferred =11800*42= $495600 C Cost of the units in the ending work-in-process inventory=(400*22)+(340*20)= $15600

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