Exercise 16-3 (Part Level Submission) The ledger of American Company has the fol

Question

Exercise 16-3 (Part Level Submission)

The ledger of American Company has the following work in process account.

Work in Process—Painting

Production records show that there were 420 units in the beginning inventory, 30% complete, 1,680 units started, and 1,530 units transferred out. The beginning work in process had materials cost of $2,440 and conversion

What is the cost of the May 31 inventory?

Work in process?

Work in Process—Painting

5/1 Balance 3,690 5/31 Transferred out ? 5/31 Materials 7,070 5/31 Labor 3,230 5/31 Overhead 1,680 5/31 Balance ?

Explanation / Answer

Work in process, May 31 = 420+1680-1530= 570 Equivalent units for materials = 1530+570= 2100 The unit materials cost for May =(7070+2440)/2100= 4.529 Equivalent units for conversion = 1530+(570*40%)= 1758 The unit materials cost for May =(3230+1680+1250)/1758= 3.504 Work in process = (570*4.529)+(570*40%*3.504)= 3380

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