The ledger of American Company has the following work in process account. Work i

Question

The ledger of American Company has the following work in process account. Work in Process—Painting 5/1 Balance 3,890 5/31 Transferred out ? 5/31 Materials 5,870 5/31 Labor 3,430 5/31 Overhead 2,480 5/31 Balance ? Production records show that there were 600 units in the beginning inventory, 30% complete, 1,780 units started, and 1,540 units transferred out. The beginning work in process had materials cost of $2,740 and conversion costs of $1,150. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

Explanation / Answer

A) Units in process at May 31

B)

Unit material cost for May

Unit transferred out             : 1540

Work in process, May 31    : 840

                                                 2380

Unit Material cost = $8610/2380 = $3.61

C)

Unit conversion cost for May

Unit conversion cost= $7060/1876 =$3.76

Work in process at May 1 600 Started into production    1780 Total units to be accounted for 2380 Less: Transferred out (1540) Work in process, May 31 840

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