The ledger of Hou Company has the following work in process account 5/31 Transfe

Question

The ledger of Hou Company has the following work in process account 5/31 Transferred out7 1 Balance 5/31 Labor 31 Balance 8,741 531 Materials6,460 2.400 Production records shove that there were 500 units in the beginning inventory, 30% complete, 1,350 units started, and 1,350 units transferred out. The beginning work in had materials cost of $4,862 and conversion costs of $3,879. The units in entry were 40% complete. Materials are entered at the beginning ofthe painting process Instructions (a) How many units are in process at May 31? (b) What is the unit materials cost for May? (c) What is the unit conversion cost for May? (d) What is the total cost of units transferred out in May? (e) What is the cost of the May 31 inventory?

Explanation / Answer

1. Ending unit = Beginning unit+Unit started-unit transfered out

= 500+1350-1350

Ending unit = 500

2. Unit material cost = Total cost of material /equivalent unit

= (4862+6460)/(1350+500)

Unit material cost = 6.12 per unit

3. Unit conversion cost = Total cost of conversion/equivalent unit of conversion cost

= (2400+1626+3879)/(1350+500*40%)

Unit conversion cost = 5.10 per unit

4. Cost of units transfered out = (6.12+5.10)*1350 = 15147

5. Cost of ending work in process = (500*6.12+200*5.10) = 4080

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