The Cutting Department of Sheridan Company has the following production and cost data for July.

Production Costs

1. Transferred out 13,700 units. Beginning work in process $0

2. Started 3,500 units that are 60% Materials 69,660

complete as to conversion Labor 18,480

costs and 100% complete as Manufacturing overhead 22,600

to materials at July 31.

Materials are entered at the beginning of the process. Conversion costs are incurred uniformly during the process.

A) Determine the equivalent units of production for (1) materials and (2) conversion costs.

Materials Conversion Costs

Total equivalent units of production

B) Compute unit costs.

Materials $

Conversion costs $

Prepare a cost reconciliation schedule.

Cost Reconciliation

Costs accounted for

Transferred out $

Work in process, July 31

Material $

Conversion costs $

1. Materials Conversion Costs

Total equivalent units of production 17,200 15,800

2. Cost per Equivalent Unit $ 4.05 $ 2.6

Explanation:

Cutting Department

Weighted-Average Method

1. Equivalent Units

Particulars Units % of Completion Equivalent Units

Materials Conversion Materials Conversion

Transferred Out 13,700 100 100 13,700 13,700

Ending Inventory 3500 100 60 3500 2100

Total Equivalent Units 17,200 15,800

The Ending Inventory units are 3500 which are not yet complete.

Materials Conversion Costs

Total equivalent units of production 17,200 15,800

2. Cost Per Equivalent Units

Materials Conversion

Cost Added 69,660 18,480 + 22,600

Total Costs 69,660 41,080

Equivalent Units 17,200 15,800

Cost per Equivalent Unit 69,660 / 17,200 41,080 / 15,800

$ 4.05 $ 2.6

Cost of Ending Work In Process $ 19635

Materials = 3500 * $ 4.05 = $ 14175

Conversion = 2100 * $ 2.6 = $ 5460

We multiply the equivalent number of units with the cost per unit to find the cost.

Cost Of Units Transferred Out = $ 91,105

Materials = 13,700 * $ 4.05 = $ 55,485

Conversion = 13,700 * $ 2.6 = $ 35620

B. A Cost Reconciliation Report

Materials Conversion

Ending WIP $ 14175 $ 5460

Transferred Out $ 55,485 $ 35620

Total $ 69660 41080

These calculated costs reconcile with the costs given in the above data.

Materials Conversion

Cost Added 69,660 18,480 + 22,600

Total Costs 69,660 41,080

These costs reconcile with the given costs.