Operations Costing: Work in Process Inventory
Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures the tents in two departments: Stitching and Customizing. All four models are processed initially in Stitching where all material is assembled and sewn into a basic tent. The Rookie model is then transferred to finished goods. After processing in Stitching, the other three models are transferred to Customizing for additional add ons, and then transferred to finished goods.
There were no beginning work in process inventories on August 1. Data for August are shown in the following table. Ending work in process is 40 percent complete in Stitching and 20 percent complete in Customizing. Conversion costs are allocated based on the number of equivalent units processed in each department.
|
|
Total |
Rookie |
Novice |
Hiker |
Expert |
|
Units started |
|
600 |
480 |
290 |
150 |
|
Units completed in Stitching Units competed in Customizing |
|
540 |
450 440 |
270 250 |
120 100 |
|
Materials |
$ 39,720 |
$12,000 |
$11,520 |
$8,700 |
$7,500 |
|
Conversion costs: |
|
|
|
|
|
|
Stitching. |
$ 50,260 |
|
|
|
|
|
Customizing |
$24,000 |
|
|
|
|
|
Total conversion cost |
$74,260 |
|
|
|
|
Required
a. What is the unit cost of each model transferred to finished goods in August?
b. What is the balance of the Work in Process Inventory on August 31 for Stitching? For Customizing?