question archive The ledger of American Company has the following work in process account
The ledger of American Company has the following work in process account
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The ledger of American Company has the following work in process account. Work in Process—Painting 5/1 Balance 3,890 5/31 Transferred out ? 5/31 Materials 5,870 5/31 Labor 3,430 5/31 Overhead 2,480 5/31 Balance ? Production records show that there were 600 units in the beginning inventory, 30% complete, 1,780 units started, and 1,540 units transferred out. The beginning work in process had materials cost of $2,740 and conversion costs of $1,150. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.
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A) Units in process at May 31
| Work in process at May 1 | 600 |
| Started into production | 1780 |
| Total units to be accounted for | 2380 |
| Less: Transferred out | (1540) |
| Work in process, May 31 | 840 |
B)
Unit material cost for May
Unit transferred out : 1540
Work in process, May 31 : 840
2380
| Cost | |
| Work in process, May 1 | $2,740 |
| Costs added: | |
| Material | 5870 |
| Total Cost | $8,610 |
Unit Material cost = $8610/2380 = $3.61
C)
Unit conversion cost for May
| Units transferred out | 1540 |
| Work in process, May 31 ( 840*40/100) | 336 |
| 1876 |
| Cost | |
| Work in process, May 1 | $1,150 |
| Costs added: | |
| Labour | 3,430 |
| Overheads | 2,480 |
| Total Cost | $7,060 |
Unit conversion cost= $7060/1876 =$3.76
