Question

Materials costs of $300,000 and conversion costs of $321,300 were charged to aprocessing department in the month of April. Materials are added at the beginning of theprocess, while conversion costs are incurred uniformly throughout the process. Therewere no units in beginning work in process, 100,000 units were started into productionin April, and there were 8,000 units in ending work in process that were 40% completeat the end of April.What was the total amount of manufacturing costs assigned to those units that werecompleted and transferred out of the process in April?

Answer 1

Answer: $9,200,000

Step-by-step explanation:

Input = 100,000 units

Ending work in progress = 8,000 units

Units that were completed and transferred out of the process:

= Input - Ending work in progress

= 100,000 - 8,000

= 92,000 units

Material Equivalence units = 8,000 x 100% + 92,000 x 100%

= 100,000 Equivalence unit

Cost of material per equivalence unit:

`=(Material\ costs)/(Material\ equivalent\ units)`

`=(300,000)/(100,000)`

= $3/EU

Conversion cost Equivalence unit = 8,000 x 40% + 92,000 x 100%

= 3,200 + 92,000

= 95,200 units

Cost of conversion per equivalence unit:

`=(conversion\ costs)/(Conversion\ cost\ Equivalence\ unit)`

`=(321,300)/(95,200)`

= $3.375

Therefore,

The total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in April:

= 92,000 x 40 + 92,000 x 60

= 3,680,000 + 5,520,000

= $9,200,000