Kramer company started its production operations on August 1st. During August, the printing Department completed 17,600 units. There were 4,400 units in ending inventory which were 80% complete with respect to materials and 10% complete with respect to conversion cost. during August, the department accumulated materials cost of 45408 and conversion cost of 76,6700. Required:

a) calculate the cost of the goods transferred out.

b) what is the value of the ending inventory?

Costs of goods transferred out is $ 785,840

Value of ending inventory is $26,268

Explanation:

The equivalent units of material cost is computed thus:

Completed units 17600*100% = 17,600

Ending inventory 4,400*80% = 3,520

Equivalent units 21,120

material unit cost = Accumulated materials cost/equivalent units

material unit cost=$45,408/21,120

=$2.15

Equivalent units of conversion cost is calculated thus:

Completed units 17,600*100% = 17,600

Ending inventory 4,400*10% = 440

Equivalent units 18,040

Conversion unit cost=Conversion costs/equivalent units

=$766,700/18,040

=$42.5

Cost of goods transferred out:

Material costs 17,600*100%*$2.15 = $37,840

Conversion costs 17,600*100%*$42.5 = $ 748,000

Total costs $ 785,840

Costs of ending inventory:

Material costs 4,400*80%*$2.15 = $7,568

Conversion costs 4,400*10%*$42.5 = $18,700

Total cost $26,268

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