Exercise 3-10 Overton Company has gathered the following information. Units in b

Question

Exercise 3-10 Overton Company has gathered the following information. Units in beginning work in process Units started into production Units in ending work in process Percent complete in ending work in process: 21,820 242,180 25,690 Conversion costs 60 % Materials 100 % Costs incurred: Direct materials Direct labor Overhead $105,600 $448,450 $185,860 Compute equivalent units of production for materials and for conversion costs. Materials Conversion Costs The equivalent units of production LINK TO TEXT netermine the unit rosts nf nndurtinn. (Raund unit costs to ? darimal nlares. Palisy 2000-2018 lahn Wiley & Sons Ins. All Rights Reserved. A Divisien of John il

Explanation / Answer

1. Equivalent Unit For Materials = Unit Started + Ending Inventory * % Completed

= 242,180 + 25,690 * 100%

= 267,870

Equivalent Unit For Conversion = Unit Started + Ending Inventory * % Completed

= 242,180 + 25,690 * 60%

= 257,594

2. Unit Cost Material = Direct Materials / Equivalent Unit For Materials

= $ 105,600 / 267,870

= 0.39 Per Unit

Unit Cost Conversion = (Direcet Labour + Over Head) / Equivalent Unit For Conversion

= ($ 448,450 + $ 185,860) / 257594

= $ 2.46 Per Unit

3. Transfer Out Cost = 242180 * (0.39 + 2.4624)

= 242180 * (2.8567)

= $ 691,826.40

Ending Inventory = 25690 * 0.39 + 15414 * 2.46

= $ 10,019 + $ 37,955.60

= $ 47,937

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