The Duolane Pottery manufactures pottery products. All direct materials are incl

Question

The Duolane Pottery manufactures pottery products. All direct materials are included at the inception of the production process. For April, there was no beginning inventory in the processing plant. Direct materials totaled $180,000 for the month. Work-in-process records revealed that 3,000 tons were started in April and that 2,100 tons were finished; 500 tons were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. Required: a. What is the cost per equivalent unit? b. What are the costs assigned to completed units? c. What are the costs transferred out? d. What are the amounts allocated to the work-in-process ending inventory?

Explanation / Answer

a. Cost per quivalent unit:

equivalent units with respect to materials will be 3,000 tons, since all the materials are added directly at the beginning of the process.

therfore equivalent units = 3,000 tons.

cost per equivalent unit = $180,000 / 3,000 tons

=>$60 per ton.

b.cost assigned to completed unts.

completed units =2,100 tons.

cost assigned = $60 * 2,100 tons

=>$126,000.

c.Cost transferred out.

=>cost assigned to completed units + normal spoilage

=>$126,000 + (500 *$60)

=>$126,000 + $30,000

=>$156,000.

d. amount allocated to work in progress ending inventory

work in progress ending inventory units = 3,000 - 2,100 finished - 500 spoiled =>400 units.

amount allocated to work in progress ending inventory = $60 * 400 =>$24,000.

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