The Polishing Department of Harbin Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,500 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 36,700; ending inventory of 7,500 units 10% complete as to conversion costs.

Manufacturing costs: Beginning inventory costs, comprised of $20,110 of materials and $-1,760 of conversion costs; materials costs added in Polishing during the month, $174,710; labor and overhead applied in Polishing during the month, $127,420 and $258,030, respectively.

(a)

Compute the equivalent units of production for materials and conversion costs for the month of September.

Materials

Conversion Costs

The equivalent units of production

(b)

Compute the unit costs for materials and conversion costs for the month. (Round unit costs to 2 decimal places, e. g. 2.25.)

Materials

Conversion Costs

Unit costs

$

$

(c)

Determine the costs to be assigned to the units transferred out and in process.

Transferred out

$

Ending work in process

$

a. Materials  = 38,200 units and Conversion Costs = 31,200

b. Materials  = $5.10  and Conversion Costs =  $13.00

c. Transferred out = $55,670 and Ending work in process = $48,000

Explanation:

First calculate the number of physical units completed and transferred to finished goods.

units completed and transferred to finished goods = beginning inventory units + units started during the period - ending inventory units

Therefore,

units completed and transferred to finished goods = 1,500 + 36,700 - 7,500

                                                                                     = 30,700

Calculation of Equivalents Units of Production for Materials and Conversion Costs.

1. Materials

Ending Work In Process Inventory (7,500 × 100%) =   7,500

Completed and Transferred  (30,700 × 100%)        = 30,700

Equivalents Units of Production for Materials         = 38,200

2. Conversion Costs

Ending Work In Process Inventory (7,500 × 10%)   =       750

Completed and Transferred  (30,700 × 100%)        = 30,700

Equivalents Units of Production for Conversion     =  31,200

Calculation of Unit costs for materials and conversion costs for the month.

Unit Cost = Total Costs ÷ Total Equivalent Units

1. Materials

Unit Cost = ($20,110 +  $174,710) ÷ 38,200

                = $5.10

2. Conversion Costs

Unit Cost = ($20,110 + $127,420 + $258,030) ÷ 31,200

                = $13.00 (2 decimal places)

Calculation of the  costs to be assigned to the units transferred out and in process.

1. Transferred out

Cost = Number of units completed and transferred × total unit cost

        = 30,700 × ($5.10 + $13.00)

        = $55,670

2. Ending work in process

Cost = Material Cost + Conversion Cost

        = (7,500 × $5.10) + (750 × $13.00)

        = $48,000

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