Compute the cost per equivalent unit for each product

Reference no: EM132185280

Question - S.E. Ltd uses process costing and weighted average method of cost valuation for its products. Product X is produced in department Z and transferred to the finished goods warehouse when completed. Given below is cost information for department Z during the month of July 2015:

Work in process (WIP), 1 July 2015 - $15,908

Manufacturing costs added in department Z during July

Direct materials used - $197,815

Conversion costs - $405,087 $602,902

Total manufacturing costs, department Z - $618,810

The cost of WIP in department Z at 1 July included $6,230 of direct material cost. The 3,500 units in WIP at 1 July were 70% complete. A total of 108,000 units were started during July and 100,000 units were completed and transferred out. At the end of July, 6,500 units remained uncompleted. The ending WIP inventory was 40% complete.

In department Z, direct material is added at the beginning of the manufacturing process whilst conversion costs are incurred evenly throughout the manufacturing process. Inspection in department Z takes place when the products are 75% complete. Normal spoilage is set at 6% of good units produced.

Required:

(a) Compute the cost per equivalent unit for each product cost category in department Z for the month of July 2015.

(b) Based on the information obtained in (a) compute the unit cost of product X for the month of July 2015. (Give your answer to the nearest cent). Write a journal entry to record the transfer of the good completed products for the month of July 2015. (Narrations are not required.)

(d) Should abnormal spoilage costs be included as part of product costs? Discuss.

Reference no: EM132185280

Questions Cloud

Comparison of us and nevada state governments : Comparison of US and Nevada State governments. For your final discussion, choose one branch of government (Legislative, Executive, Judicial).

What is the literary form of your passage : What is the literary form of your passage? Are there other places in the Bible (or related text) where this form is used and which help to interpret.

How does lessee report the amortization : How does Lessee report the amortization and interest components of lease expense on the income statement under an Operating Lease

Describe how the given costs off-set : Describe how these costs off-set. Discuss the role of "in-kind" donations as a vehicle to decrease costs and/or improve revenue flow.

Compute the cost per equivalent unit for each product : Compute the cost per equivalent unit for each product cost category in department Z for the month of July 2015

Create organizational culture that promotes the prevention : According the text, the fundamental purpose of a compliance plan is to create an organizational culture that promotes the prevention, identification.

Which reform option would have been a good option : There are eight reform options for policy advocates during the reform process. Rank the options based on more easily accomplished to most difficult.

Calculate the intrinsic value of lava development shares : Lava Development Company has maintained stable earnings of $7 per share, Calculate the intrinsic value of Lava Development shares

What is the price of builtrite stock : Reading a stock quote, you see that builtrite pays a $2.50 dividend and has a PE of 16. you also note that builittite pays out one quarter of its earning

User Account

All Pages