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

Question

The ledger of Custer Company has the following work in process account.

Work in Process—Painting

Production records show that there were 430 units in the beginning inventory, 30% complete, 1,560 units started, and 1,540 units transferred out. The beginning work in process had materials cost of $3,030 and conversion costs of $1,700. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

d) What is the total cost of units transferred out in May? (Round answer to 0 decimal places, e.g. 1,225.)

(e) What is the cost of the May 31 inventory? (Round answer to 0 decimal places, e.g. 1,225.)

  

Work in Process—Painting

5/1 Balance 4,730 5/31 Transferred out ? 5/31 Materials 5,380 5/31 Labor 2,910 5/31 Overhead 1,420 5/31 Balance ?

Explanation / Answer

Solution :

Reconcilation of the number of physical units worked on during the period.

As at Begining

430

Units started in current period

1,560

Units to be accounted for

1,990

Transferred out

1,540

As at end

450

Units accounted for

1,990

calculation of equivalent units.

Direct Materials

Conversion Costs

Transferred out (A)

1,540

1,540

Units as at end (B)

450

450

Percentage of completion (C)

100%

40%

Equivalent units as at 31 May (D=B×C)

450

180

Total equivalent units (A+D)

1,990

1,720

calculate the cost per equivalent unit.

Total

Direct Materials

Conversion Costs

As at begining

3030

1700

4730

Added during the period

5380

4330

9710

Costs to be accounted for

8410

6030

14440

Total equivalent units

1,990

1,720

Cost per equivalent unit

4.22613

3.50581

7.73194

total cost of units transferred out in May

   11,907

(1540 * 7.73)

cost of the May 31 inventory

     2,533

(450 * 4.23) + (180 * 3.51)

Reconcilation of the number of physical units worked on during the period.

As at Begining

430

Units started in current period

1,560

Units to be accounted for

1,990

Transferred out

1,540

As at end

450

Units accounted for

1,990

calculation of equivalent units.

Direct Materials

Conversion Costs

Transferred out (A)

1,540

1,540

Units as at end (B)

450

450

Percentage of completion (C)

100%

40%

Equivalent units as at 31 May (D=B×C)

450

180

Total equivalent units (A+D)

1,990

1,720

calculate the cost per equivalent unit.

Total

Direct Materials

Conversion Costs

As at begining

3030

1700

4730

Added during the period

5380

4330

9710

Costs to be accounted for

8410

6030

14440

Total equivalent units

1,990

1,720

Cost per equivalent unit

4.22613

3.50581

7.73194

total cost of units transferred out in May

   11,907

(1540 * 7.73)

cost of the May 31 inventory

     2,533

(450 * 4.23) + (180 * 3.51)

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