Gray Brothers Products Inc. manufactures a liquid product in one department. Due

Question

Gray Brothers Products Inc. manufactures a liquid product in one department. Due to the nature of the product and the process, units are regularly lost at the beginning of production. Materials and labor and overhead costs are added evenly throughout the process. The following summaries were prepared for the month of January: Production Summary Units 10,000 8,000 1,000 1/2 1,000 . . . Finished and transferred to the stockroom..... . .. In process, end of the month Stage of completion Lost in process Cost Summary Labor Factory Calculate the unit cost for materials, labor, and factory overhead for January and show the costs of units transferred to finished goods and of the ending work 33,000 20,625 in process inventory. Round your answers to two decimal places and use the rounded answers in subsequent calculations, if necessary

Explanation / Answer

Cost summary: Materials 132000 Labor 33000 Factory overhead 20625 Total costs to be accounted for 185625 Equivalent units: Finished and transferred 8000 work in process at the end (1000*1/2) 500 Total 8500 Unit costs for the month: Materials (132000/8500) 15.53 Labor (33000/8500) 3.88 Factory overhead (20625/8500) 2.43 Total unit cost 21.84 Cost of units transferred to finished goods (8000*21.84) 174720 Cost of ending work in process (1000*1/2*21.84) 10920 Total costs to be accounted for 185640 (Difference is due to round off)

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