Root\'s Exterior\'s produces exterior siding for homes. Preparation Department b

Question

Root's Exterior's produces exterior siding for homes. Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesivemixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. March data are for the preparation department are as follows Sheets Beginning WIP Inventory 0 sheets; started production 3,800 sheets; completed and transferred out to Compression in March 2,900 sheets; Ending work as process inventory (30% of the way through the preparations process) 900 sheets. Costs Beginning work in process inventory 0; costs adding during March - Wood 2,888; Adhesive 1,914; Direct labor 987; Manufacturing Overhead 2,500; Total costs $8,289

Explanation / Answer

Equivalent units

Cost                                                                $4802                        $3487

Cost per unit                                                      $1.26                      $1.1

Cost transferred (2900*1.26 +2900*1.1) = $6,855

Ending WIP (900*1.26 + 270*1.1)             = $1,434

Beginning WIP 0 Started and completed 2,900 Started 3,800 Ending WIP    270 units to be accounted units accounted for 3,800

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