Reference no: EM133057852

Question - Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 15%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect.

	Units	Costs
Work in process, December 31 (materials 100% complete; conversion 60% complete)	42,000	$77,000
Finished goods, December 31	47,000	$130,500

There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department.

A review of the company's inventory and cost records shows the following:

	Units	Costs
		Materials	Conversion
Work in process, beginning of year (materials 100% complete; conversion 50% complete)	37,000	$39,000	$65,000
Started into production	617,000
Costs added during the year		$767,000	$2,170,000
Units completed during the year	850,000

Required -

1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year.

2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.

3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31.