Pearl's is a high-end skincare line that has been created by dermatologists for people who have very dry skin. Pearl's is very selective about who carries their line and therefore is considered a boutique label. Their best-selling product is a lightweight moisturizer that also contains a high level of SPF that their customers have come to appreciate. Pearl's produces their products in limited quantities to best ensure that each container receives the time and attention that it deserves to ensure high quality. As of December 31 of last year, a batch in process contained 237 units that were 67% complete for Conversion Costs (CC) and 100% complete for direct materials (DM) because all DM is added at the front-end of processing. During the current year, Pearl's started 17,456 units and completed 16,879 units by the close of the year. Units remaining in ending inventory are 72% complete for CC and 100% complete for DM in the current year. Pearl's had the following costs for the year that are associated with all of the units described above:
Currently, each unit is in a small, recyclable plastic container. Pearl's uses the First-In, First-Out (FIFO) method of Process Costing. Using the information above, please answer the following questions.
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials? What is the equivalent cost per unit for Conversion Costs?
b. Using the Process Costing steps, assign Direct Materials and Conversion Costs to the physical units for the year.
c. What is the total amount of cost transferred out of the production process and what would the journal entry look like?

Question

Pearl's is a high-end skincare line that has been created by dermatologists for people who have very dry skin. Pearl's is very selective about who carries their line and therefore is considered a boutique label. Their best-selling product is a lightweight moisturizer that also contains a high level of SPF that their customers have come to appreciate. Pearl's produces their products in limited quantities to best ensure that each container receives the time and attention that it deserves to ensure high quality. As of December 31 of last year, a batch in process contained 237 units that were 67% complete for Conversion Costs (CC) and 100% complete for direct materials (DM) because all DM is added at the front-end of processing. During the current year, Pearl's started 17,456 units and completed 16,879 units by the close of the year. Units remaining in ending inventory are 72% complete for CC and 100% complete for DM in the current year. Pearl's had the following costs for the year that are associated with all of the units described above:
  Currently, each unit is in a small, recyclable plastic container. Pearl's uses the First-In, First-Out (FIFO) method of Process Costing. Using the information above, please answer the following questions.
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials? What is the equivalent cost per unit for Conversion Costs?
b. Using the Process Costing steps, assign Direct Materials and Conversion Costs to the physical units for the year.
c. What is the total amount of cost transferred out of the production process and what would the journal entry look like?

Quizplus · Accepted Answer

The Answer of Pearl's is a high-end skincare line that has been created by dermatologists for people who have very dry skin. Pearl's is very selective about who carries their line and therefore is considered a boutique label. Their best-selling product is a lightweight moisturizer that also contains a high level of SPF that their customers have come to appreciate. Pearl's produces their products in limited quantities to best ensure that each container receives the time and attention that it deserves to ensure high quality. As of December 31 of last year, a batch in process contained 237 units that were 67% complete for Conversion Costs (CC) and 100% complete for direct materials (DM) because all DM is added at the front-end of processing. During the current year, Pearl's started 17,456 units and completed 16,879 units by the close of the year. Units remaining in ending inventory are 72% complete for CC and 100% complete for DM in the current year. Pearl's had the following costs for the year that are associated with all of the units described above:
  Currently, each unit is in a small, recyclable plastic container. Pearl's uses the First-In, First-Out (FIFO) method of Process Costing. Using the information above, please answer the following questions.
(Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for Direct Materials? What is the equivalent cost per unit for Conversion Costs?
b. Using the Process Costing steps, assign Direct Materials and Conversion Costs to the physical units for the year.
c. What is the total amount of cost transferred out of the production process and what would the journal entry look like?

Pearl's Is a High-End Skincare Line That Has Been Created