QUESTION 2 INSTRUCTION 2: (Round S-amounts to the nearest $.01 (le. penny) Show
ID: 2328911 • Letter: Q
Question
QUESTION 2 INSTRUCTION 2: (Round S-amounts to the nearest $.01 (le. penny) Show support for your answers Use the information below AND determine the (a) cost of the units transferred out and (b) the cost of the ending WIP for October 31. HINT Use your hard copy of the production cost report to assist you The Trimning Department of Smith Tire & Rubber reports the following information for the month of October 2018: Materials are entered at the beginning of the trimming process. Other costs are incurred evenly during the trimming process Production results were: (1) 12000 units were transferred out at the end of the month (2) At October 31 2018, 3,000 units were left 40% complete as to conversion and 100% complete as to material Cost accumulated during October include: (1) S0 costs (ie, no beginning WIP) at October 1, 2018 (2) Material, $55,000 (3) Labor, $16.200 4) Manufacturing Overhead, $18,300 HINT: Use your hard copy of the production cost report to assist youExplanation / Answer
Equivalent unit of material = 12000+3000 = 15000
Equivalent unit of conversion = 12000+(3000*40%) = 13200
Cost per equivalent unit of material = 55000/15000 = 3.67 per unit
Cost per equivalent unit of conversion = (16200+18300)/13200 = 2.61 per unit
a) Cost of unit transferred out = (3.67+2.61)*12000 = 75360
b) Cost of ending WIP = (3000*3.67+1200*2.61) = 14140