Exercise 16-3 Work in Process—Painting Exercise 16-3 The ledger of Custer Compan
ID: 2427640 • Letter: E
Question
Exercise 16-3
Work in Process—Painting
Exercise 16-3
The ledger of Custer Company has the following work in process account.Work in Process—Painting
5/1 Balance 3,700 5/31 Transferred out ? 5/31 Materials 5,510 5/31 Labor 2,970 5/31 Overhead 1,590 5/31 Balance ?Production records show that there were 510 units in the beginning inventory, 30% complete, 1,430 units started, and 1,450 units transferred out. The beginning work in process had materials cost of $2,200 and conversion costs of $1,690. 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
Opening Stock at May 1 = 510 units
Units Started in May = 1430 units
Units Transferred Out in May = 1450 units
Closing Stock =510+1430-1450 = 490 Units
(b) Unit Material Cost for May
Material Cost for Opening Stock = 0
Material Cost for New Units Started = 5,510 $
Total Material Cost = 5,510 $
Total Units Processed = (510*0%)+(1430*100%)+(490*100%) = 1920 units
Unit cost of Material for May = 5,510/1920 = $ 2.87 per unit
(c) Unit Conversion Cost for May
Conversion Cost for Opening Stock = 3,700 $
Conversion Cost for New Units Started = 4,560 $(Labour cost+Overheads)
Total Conversion Cost = 8,260 $
Total Units Processed = (510*70%)+(1430*100%)+(490*40%) = 1983 units
Unit cost of conversion for May = 8,260/1983 = $ 4.17 per unit
(Note: The answer to the points (a), (b), (c) have been given assuming that 100% material is used in the starting of processing and that material is not added all through the processing cycle)
(a) Total Cost of Units transferred out in May
Units transferred out in May = 1450 Units
Material cost = 2,200 $ + (2.87 * 940)$ = 4,897.80 $
Conversion Cost = 1,690 $ + (4.17 * 940)$ = 5,609.80 $
Total Cost of units transferred out in May = 10,507.60 $
(b) Cost of May 31 inventory
Units in May inventory = 490 units
Material cost of May inventory = 490*2.87*100% = 1,406.30 $
Conversion cost of May inventory = 490*4.17*40% = 817.32 $
(Note: The answer to the points (a), (b) have been given assuming that 100% material is used in the starting of processing and that material is not added all through the processing cycle)
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