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