Beginning inventory was 4,000 units, one-fourth complete as to labor and factory

Question

Beginning inventory was 4,000 units, one-fourth complete as to labor and factory overhead. During the period, 30,000 units were started in process and 28,000 units were finished. There were 6,000 units in ending work in process, one-half complete as to labor and factory overhead. Assuming that all materials are put into production at the beginning of the process, while labor and overhead are applied evenly throughout production. 3. Determine the equivalent units of production for direct materials and for direct labor and factory overhead Lexington Lumber Co. processes rough timber to ob and C. The company allocates costs to the joint products on the basis of market value. During the month of May, Lexington incurred total production costs of S300,000 in producing the following: 4. Grade Thousand Board Feet Selling Price per 1,000 Board Feet 200 300 500 $200 100 150 Allocate the costs for each product.

Explanation / Answer

3 Equivalent units of production for direct material: Units finished and transferred out          28,000 Units in ending inventory, 100% complete            6,000 Equivalent units of production          34,000 Equivalent units of production for direct labor and factory overhead: Units finished and transferred out          28,000 Units in ending inventory, 6,000 x 50%            3,000 Equivalent units of production          31,000 4 Grade Thousand Board Feet Selling Price per 1,000 Board Feet Market Value % Joint Cost Allocated cost (1) (2) (1) x (2) (3) (4) (3) x (4) A 200 $200 $40,000 27.59% $300,000 $82,759 B 300 100 $30,000 20.69% $300,000 $62,069 C 500 150 $75,000 51.72% $300,000 $155,172 Total $145,000 100.00% $300,000 1 Equivalent units of production for direct material: Units in beginning inventory                400 Units statrted in production          14,600 Equivalent units of production          15,000 Equivalent units of production for direct labor and factory overhead: Units in beginning inventory                400 Units started and completed          13,400 Units in ending inventory, 1,200 x 25%                300 Equivalent units of production          14,100 2 Material Labor Factory Overhead Cost Incurred $45,000 $36,000 $22,500 ÷ no of units          20,000               20,000                        20,000 Unit cost $          2.25 $               1.80 $                        1.13

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