Materials costs of $500,000 and conversion costs of $535,500 were charged to a p
ID: 2377780 • Letter: M
Question
Materials costs of $500,000 and conversion costs of $535,500 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 work in process, 100,000 units were started into production in September, and there were 8,000 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)$977,500.
B)$1,035,500.
C)$1,063,000.
D)$460,000.
also, could you show me how you calculated the answer? Thank you
A)$977,500.
Explanation / Answer
Material cost has incurred to all units ( wheather completed or not ) uniformally while conversion cost only incurred with completed units and 40% of non completed.
material cost per unit = 500000/100000 = $5/unit
So material cost of completed and transfurred units = 92000*5 = $460000
partial completed units = 8000 * 0.4 = 3200
so conversion cost incurred to 92000+3200 = 95200 units
per unit conversion cost = 535500/95200 = 5.625
So conversion cost of completed and transfurred units = 5.625*92000 = 517500
total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September = 460000 + 517500 = $977500