Reference no: EM132853697

Problem - Letcher Corporation makes blue jeans. Its process involves two departments, cutting and sewing. The following data pertain to the cutting department's transactions in Year 2.

1. The beginning balance in work in process inventory was $30,000. This inventory consisted of fabric for 7.000 pairs of jeans. The beginning balances in raw materials inventory, production supplies, and cash were $224,000, $20,800, and $286,000, respectively.

2. Direct materials costing $167,200 were issued to the cutting department; this amount of materials was sufficient to start work on 21,000 pairs of jeans.

3. Direct labor cost was $144,000, and indirect labor cost was $32,400. All labor costs were paid in cash.

4. The predetermined overhead rate was $0.45 per direct labor dollar.

5. Actual overhead costs other than indirect materials and indirect labor for the year amounted to $12.000, which was paid in cash.

6. The cutting department completed cutting 20,000 pairs of jeans. The remaining jeans were 40 percent complete.

7. The completed units of cut fabric were transferred to the sewing department.

8. All of the production supplies had been used by the end of the year.

9. Over- or underapplied overhead was closed to the Cost of Goods Sold account.

Required -

a. Determine the number of equivalent units of production.

b. Determine the product cost per equivalent unit.

c. Allocate the total cost between ending work in process inventory and units transferred to the sewing department.

d. Record the transactions in a partial set of T-accounts.