The Blending Department of Hancock Company has the following cost and production
ID: 2365961 • Letter: T
Question
The Blending Department of Hancock Company has the following cost and production data for the month of April.Costs:
Work in process, April 1
Direct materials: 100% complete $100,000
Conversion costs: 20% complete 70,000
Cost of work in process, April 1 $170,000
Costs incurred during production in April
Direct materials $800,000
Conversion costs 362,000
Costs incurred in April $1,162,000
Units transferred out totaled 14,000. Ending work in process was 1,000 units that are 100% complete as to materials and 40% complete as to conversion costs.
Compute the equivalent units of production for (1) materials and (2) conversion costs for the month of April.
Materials= ??????$
Conversion costs=??????$
Compute the unit costs for the month.
Unit cost-Materials =??????$
Unit cost-Conversion costs =??????$
Determine the costs to be assigned to the units transferred out and in ending work in process.
Transferred out =$??????
Work in process =??????$
Materials =??????$
Conversion costs =??????$
Total costs =??????$
Explanation / Answer
EU of Production
Materials Conversion
Units transferred out 14,000 14,000
Ending WIP
Materials 100% 1,000
Conversion 40% 400
Total 15,000 14,400
Material & Conversion cost for the month of April
Materials cost = $800,000
Conversion costs = $362,000
Compute the unit costs
Unit cost Materials ($100,000 + $800,000) / 15,000 = $60
Unit cost Conversion ($70,000 + $362,000) / 14,400 = $30
Determine the costs to be assigned to the units transferred out and in ending work in process.
Transferred out $1,260,000 [14,000 x ($60 +$30)]
Work in process $72,000 [(1,000 x $60) +(400 x $30)]
Total $1,332,000
Materials $900,000 (15,000 x $60)
Conversion costs $432,000 (14,400 x $30)
Total costs $1,332,000
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