Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a
ID: 2352796 • Letter: M
Question
Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September.What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September?
a. $1,500,000
b. $2,000,000
c. $1,606,500
d. $1,365,000
What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in progress?
a. $455,000
b. $500,000
c. $320,000
d. $200,000
Please show solution. Thank you very much!!
Explanation / Answer
Input = 20000 units Ending work in progress = 5000 units Units that were completed and transferred out of the process = 20000 - 5000 = 15000 units Material Equivalence units = 5000 x 100% + 15000 x 100% = 20000 Equivalence unit Cost of material per equivlence unit = 800000/20000 = $40/EU Conversion cost Equivalence unit = 5000 x 40% + 15000 x 100% = 17000 EU Cost of conversion per equivalence unit = 1020000/17000 $60/EU What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September? 15000 x 40 + 15000 x 60 = $1500000 (a is the answer) What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in progress? 5000 x 40 + 5000 x 40% x 60 = $320000 (c is the answer) Hope this helps!