Sanchez & Company produces paints. On July 1, it had no work-in-process inventor

Question

Sanchez & Company produces paints. On July 1, it had no work-in-process inventory. It starts production of 104,000 gallons of paint in July and completes 82,000 gallons. The costs of the resources used by Sanchez in July consist of the following: Materials Conversion costs (labor and overhead) S 286,044 289,200 Required The production supervisor estimates that the ending work-in-process is 86 percent complete. Compute the cost of paint transferred to finished goods and the amount in work-in-process ending inventory as of July 31. (Do not round intermediate calculations.) Cost of paint transferred to finished goods Work-in-process ending inventory

Explanation / Answer

Particulars Units %age complete Equivalent Units Completed units in gallons 82000 100% 82000 WIP Units in gallons 22000 86% 18920 Total units introduced in gallons 104000 100920 Cost per Equivalent Unit = Total Cost Equivalent Units = $286044+$289200 100920 Cost per Equivalent Unit = $5.70 Cost of paint transferred to finished goods = 82000*$5.70 = $467,400.00 WIP ending Inventory = 18920*$5.70 = $107,844.00

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