The ledger of Custer Company has the following work in process account. Exercise
ID: 2419565 • Letter: T
Question
The ledger of Custer Company has the following work in process account.
Exercise 16-3 (Part Level Submission) The ledger of Custer Company has the following work in process account. Work in Process-Painting 5/1 Balance 5/31 Materials 7,140 5/31 Labor 5/31 Overhead1,870 5/31 Balance 3,790 5/31 Transferred out ? 4,240 Production records show that there were 500 units in the beginning inventory, 30% complete, 1,430 units started, and 1,580 units transferred out. The beginning work in process had materials cost of $2,970 and conversion costs of $820. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process (a) Your answer is correct. (a) How many units are in process at May 31? Work in process, May 31 (b) What is the unit materials cost for May? (Round unit cost to 3 decimal places, e.g. 2.257.) The unit materials cost for May (c) What is the unit conversion cost for May? (Round unit cost to 3 decimal places, e.g. 2.257.) The unit conversion cost for May 350 units 5.24 4.03Explanation / Answer
b). Solution:
Calculation of Equivalent number of units:
for material for conversion
Opening stock 0 350 (500 * 70%)
Started & finished 1080 1080 (1430 - 350)
Closing stock 350 140 (350 * 40%)
TOTAL 1430 1570
Cost per equivalent unit:
material Conversion
A. Cost 7140 6110
B. Equivalent units 1430 1570
Cost per equivalent unit:(A/B) 4.99 3.89
Total Cost of units transferred out:
Assuming FiFO method is applicable.
Total units transferred = 1580.
Opening inventory balance: material $2970
Conversion Cost $820
Conversion of opening cost this month $1361.50
(500 * 70% * 3.89)
Other 1080 units produced during this period
Material (1080 * 4.99) 5389.20
Conversion 4201.2
TOtal cost of units transferred in may = 14741.90
b). Cost of the May 31 inventory
Material (350 * 4.99) = 1746.5
Conversion cost (350 * 3.89) = 1361.50
Total = $3108
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