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28 February, 16:06

Materials costs of $800,000 and conversion costs of $1,020,000 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning, 20,000 units were started into production in September, and there were 5,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September? a. $1,500,000b. $2,000,000c. $1,606,500d. $1,365,000What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in progress? a. $455,000b. $500,000c. $320,000d. $200,000

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  1. 28 February, 17:01
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    ending WIP: 320,000

    transferred-out: 1,500,000

    Explanation:

    20,000 started - 5,000 ending WIP = 15,000 complete

    equivalent units: complete units + ending WIP x percentage of completion

    cost of EU: cost added / EU

    Materials

    EU: 15,000 + 5,000 x 100% = 20,000

    Cost per EU: 800,000 / 20,000 = 40

    Ending WIP: 5,000 x 40 = 200,000

    transferred-out: 15,000 x 40 = 600,000

    Conversion

    EU: 15,000 + 5,000 x 40% = 15,000 + 2,000 = 17,000

    Cost per EU: 1,020,000 / 17,000 = 60

    Ending WIP: 2,000 x 60 = 120,000

    transferred-out: 15,000 x 60 = 900,000

    Total ending WIP

    200,000 + 120,000 = 320,000

    Total transferred-out

    600,000 + 900,000 = 1,500,000
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