E16-3 | Answer questions on costs and production.(SO 3, 5, 6), APThe ledger of Custer Company has the following work in process account. Work in Process—Painting |
5/1 | Balance | 3,590 | 5/31 | Transferred out | ? |
5/31 | Materials | 5,160 | | | |
5/31 | Labor | 2,740 | | | |
5/31 | Overhead | 1,380 | | | |
5/31 | Balance | ? | | | |
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Production records show that there were 400 units in the beginning inventory, 30% complete, 1,400 units started, and 1,500 units transferred out. The beginning work in process had materials cost of $2,040 and conversion costs of $1,550. The units in ending inventory were 40% complete. Materials are entered at the beginning of the 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? |
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EXERCISE 16-3
(a) Work in process, May 1 400
Started into production 1,100
Total units to be accounted for 1,500
Less: Transferred out 1,200
Work in process, May 31 300
(b) | | | Equivalent Units |
| | | | | |
| | | Materials | | Conversion Costs |
| | | | | |
| Units transferred outWork in process, May 31 300 X 100% 300 X 40% | | 1,200 300 1,500 | | 1,200 1201,320 |
| | | DirectMaterials | | Conversion Costs |
| | | | | |
| Work in process, May 1Costs addedTotal materials cost | | $2,040 5,160$7,200 | | $1,550 4,390$5,940 |
$7,200 ÷ 1,500 = $4.80
(c) $5,940 ÷ 1,320 = $4.50
(d) Transferred out (1,200 X $9.30) $11,160
(e) Work in process
Materials (300 X $4.80) $1,440
Conversion costs (120 X $4.50) 540
$1,980