The Polishing Department of Major Company has the following production and manufacturing cost data for September. 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 42,900; 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, $175,800; labor and overhead applied in Polishing during the month, $125,680 and $257,140, respectively. Instructions:a. compute the equivalent units of production for materials and conversion costs for the month of septemberb. compute the unit costs for materials and conversion costs for the month. c. determine the costs to be assigne to the units transfered out in the process.

a. compute the equivalent units of production for materials and conversion costs

materials = 44,500

conversion costs = 40,000

b. compute the unit costs for materials and conversion costs for the month

materials = $4.40

conversion = $10.65

c. determine the costs to be assign to the units transferred out in the process

Cost of units transferred out in the process = $594,475

Explanation:

a. compute the equivalent units of production for materials and conversion costs

materials

Units Completed and Transferred to Finished Goods (100%×39,500) =39,500

Units in Closing Work In Process (100%×5,000)                                      = 5,000

Total                                                                                                            = 44,500

conversion costs

Units Completed and Transferred to Finished Goods (100%×39,500) =39,500

Units in Closing Work In Process (10%×5,000)                                         =

500

Total                                                                                                            = 40,000

Calculation of Units Completed and Transferred to Finished Goods

1,600+42,900-5,000 = 39,000

b. compute the unit costs for materials and conversion costs for the month

materials

Opening Work In Process Costs            =  $20,000

Add Costs Incurred during the Period   = $175,800  

Total                                                          = $195,800

Unit costs for materials = Total Costs / Equivalent units of production for materials

                                       = $195,800 / 44,500

                                       = $4.40

conversion

Opening Work In Process Costs                                                 =  $43,180

Add Costs Incurred during the Period($125,680 + $257,140)  = $382,820  

Total                                                                                              = $426,000

Unit costs for conversion = Total Costs / Equivalent units of production for conversion

                                       = $426,000 / 40,000

                                       = $10.65

c. determine the costs to be assign to the units transferred out in the process

Total Unit Cost Calculation

Materials     = $4.40

Conversion = $10.65

Total            = $15.05

Cost of units transferred out in the process = 39,500 × $15.05

                                                                        = $594,475

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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