Process Costing

Process Costing

The Polishing Department of Grayson Manufacturing Company has the following production and manufacturing cost data for August. Materials are entered at the beginning of the process.

Production: Beginning inventory 1,600 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 18,400; ending inventory of 5,000 units 10% complete as to conversion costs.

Manufacturing costs: Beginning inventory costs, comprised of $20,000 of materials and $43,180 of conversion costs; materials costs added in Polishing during the month, $177,200; labor and overhead applied in Polishing during the month, $102,680 and $257,140, respectively.

Instructions

(a) Compute the equivalent units of production for materials and conversion costs for the month of August.

(b) Compute the unit costs for materials and conversion costs for the month.

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

Production

Beginning Inventory = 1,600 units

100% complete as to materials and 30% complete as to conversion costs

Units started during the period are 18,400 units

Ending Inventory = 5,000 units (10% complete as to conversion costs)

Manufacturing Costs

Beginning Inventory costs:

Materials = $20,000

Conversion costs = $43,180

Materials costs added in polishing during the month = $177,200

Labor and Overhead applied in polishing during the month = $102,680 and $257,140

Units Completed and Transferred out Materials

100% complete as to materials = 1,600 units

Units started during the period = 18,400

Ending Inventory = 5,000

Units Completed and Transferred out Materials

1,600 + 18,400 - 5,000 = 15,000

Equivalent Units of ending Work in Process Materials

Equivalent units of ending work in process materials

5,000 units * 10% complete = 500 units

Equivalent units of ending work in process materials = 100% complete

Equivalent units of production...