Materials costs of $500,000 and conversion costs of $535,500 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 work in process, 100,000 units were started into production in September, and there were 8,000 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?

Question

Materials costs of $500,000 and conversion costs of $535,500 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 work in process, 100,000 units were started into production in September, and there were 8,000 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?

Quizplus · Accepted Answer

The total manufacturing costs assigned to the units completed and transferred out of the process in September is $977,500. This is calculated as follows:Total manufacturing costs = Materials costs + Conversion costs= $500,000 + $535,500= $1,035,500Equivalent units of production = Units started into production + (Units in ending work in process * % complete)= 100,000 + (8,000 * 40%)= 100,000 + 3,200= 103,200Cost per equivalent unit = Total manufacturing costs / Equivalent units of production= $1,035,500 / 103,200= $10.03Total manufacturing costs assigned to units completed and transferred out = Cost per equivalent unit * Units completed and transferred out= $10.03 * 100,000= $977,500

Materials Costs of $500,000 and Conversion Costs of $535,500 Were