Kramer, Inc., manufactures a product that passes through two processes: mixing a
ID: 2499660 • Letter: K
Question
Kramer, Inc., manufactures a product that passes through two processes: mixing and molding. all manufacturing costs are added uniformly in the mixing department.
Information for the mixing department for April follows:
Work in process, April 1:
Units (35% complete)
5,000
Direct materials
$24,000
Direct labor
$30,000
Overhead
$10,000
During April, 25,000 units were completed and transferred to the molding department. The following costs were incurred by the mixing department during April:
Direct materials
$90,000
Direct labor
$120,000
Overhead
$30,000
By April 30, 2,500 units that were 80 percent complete remained in Mixing. Kramer uses the weighted average method.
Kramer's cost of April's ending work in process for the mixing department would be:
Work in process, April 1:
Units (35% complete)
5,000
Direct materials
$24,000
Direct labor
$30,000
Overhead
$10,000
Explanation / Answer
Equivalent units for mixing department = (25000 * 100% ) +(2500 * 80%)
= 25000 + 2000
= 27000 units
Total cost = 24000 + 30000 +10000 + 90000 +120000 +30000 = 304000
cost per equivalent unit = 304000 / 27000 =$ 11.2593 per unit
cost of ending WIP = 2500 *.80 * 11.2593 = $ 22518.60
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