The Polishing Department of Bonita Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,580 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 41,200; ending inventory of 6,600 units 10% complete as to conversion costs. Manufacturing costs: Beginning inventory costs, comprised of $20,600 of materials and $14,674 of conversion costs; materials costs added in Polishing during the month, $186,883; labor and overhead applied in Polishing during the month, $127,600 and $257,440, respectively.

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

a. materials =  42,780 and conversion costs = 36,840

b. materials = $4.85 and conversion costs = $10.85

c. units transferred out =   $568,026 and in process =  $39,171

Explanation:

First calculate the number of units completed and transferred out of the  Polishing Department.

Units completed and transferred out  = 1,580  + 41,200 - 6,600

                                                                 = 36,180

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

materials

Units completed and transferred out (36,180 × 100%) = 36,180

Units of Ending Work In Process (6,600 × 100%)         =  6,600

Total equivalent units of production for materials       = 42,780

conversion costs

Units completed and transferred out (36,180 × 100%)             = 36,180

Units of Ending Work In Process (6,600 × 10%)                       =      660

Total equivalent units of production for conversion costs      = 36,840

Calculate the unit costs for materials and conversion costs for the month

Unit costs for materials = Total Cost for materials / Total equivalent units of production for materials

                                      = ( $20,600 +  $186,883) / 42,780

                                      = $4.85

Unit costs for conversion costs = Total Cost for conversion costs / Total equivalent units of production for conversion costs

                                      = ( $14,674  +  $127,600  + $257,440) /  36,840

                                      = $10.85

Total unit cost = $4.85 + $10.85

                        = $15.70

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

Cost units transferred out = Number of Units Transferred out × Total Unit Cost

                                             = 36,180 × $15.70

                                             =  $568,026

Cost of Units In Process Calculation :

Material Cost ( 6,600 × $4.85)       = $32,010

Conversion Costs ( 660 × $10.85) =    $7,161

Total Cost of Units In Process       =  $39,171

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