6) The Zygo part of the personal computer manufactured by a major corporation st

Question

6) The Zygo part of the personal computer manufactured by a major corporation start of the production process while conversion costs are added uniformly throughout process. June is Zygon's Direct materials cost for the month totaled $895,000, while conversion costs equaled $4,225,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were complet n Corporation was recently formed to produce a semiconductor chip that forms an essential . The direct materials are added at the first month of operations, and therefore, there was no beginning inventory. ed. Ending inventory was 50% complete as to conversion costs. Required: a. What is the total manufacturing cost per chip for June? b. Allocate the total costs between the completed chips and the chips in ending inventory.

Explanation / Answer

a.

Calculate equivalent units for materials and conversion cost.

Materials are added at the start of the production process. Ending inventory was 50% complete as to conversion costs.

Therefore,

Equivalent units for materials = Number of units started in June = 475,000

Equivalent units for conversion costs

= Number of units complete + (Number of uints in ending inventory x 50%)

= 425,000 + [(475,000-425,000) x 50%]

= 450,000

Compute cost per equivalent unit for materials and conversion costs.

Cost per equivalent unit for materials

= Total material cost/Equivalent units for materials

= $895,000/475,000

= $1.8842

Cost per equivalent unit for conversion costs

= Total conversion costs/Equivalent units for conversion costs

= $4,225,000/450,000

= $9.3889

Thus,

Total manufacturing cost per unit

= Cost per equivalent unit for materials + Cost per equivalent unit for conversion costs

= $1.8842 + $9.3889

= $11.2731

b.

Cost of completed units = Number of completed uints x Cost per unit = 425,000 x $11.2731 = $4,791,067.50

Cost of ending inventory

= Materials cost + Conversion cost

= (Number of equivalent units for materials x Cost per equivalent unit for materials) + (Number of equivalent units for conversion costs x Cost per equivalent units for conversion cost)

= (50,000 x $1.8842) + (25,000 x $9.3889)

= $328,932.50

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.