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22 May, 21:45

Clarke Manufacturing Company makes a single product that is produced on a continuous basis in one department. All materials are added at the beginning of production. The total cost per equivalent unit in process in March was $6.00, consisting of $4.80 for materials and $1.40 for conversion. During the month, 9,000 units of product were transferred to finished goods inventory; on March 31, 3,500 units were in process, 10 percent converted. The company uses weighted average costing.

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  1. 22 May, 21:51
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    a - Cost of finished goods = $54000

    b - Cost of ending wip = $17290

    c - Cost of beginning and total = $71290

    Explanation:

    The question has three requirements mentioned as follows;

    a - Determine the cost of goods transferred to finished goods inventory.

    b - Determine the cost of the ending work-in-process inventory.

    c - Determine the total cost of the beginning work-in-process inventory plus the current manufacturing costs?

    The solutions to each requirement are as follows:

    a - cost of finished goods?

    The cost of finished goods (9000 units) includes all of the production cost per unit which in this question is $6.

    So the cost of finished goods is = $6*9000

    Cost of finished goods = $54000

    b - cost of ending work - in-process inventory?

    Ending work-in-process inventory are 3500 units of which 10% has been converted. This implies that ending work-in-process inventory would have consumed 100% material but 0% conversion cost since they are under process yet but 10% (i. e 3500*10%=350 units) of the work-in-process have been converted which means only 10% of the work-in-process inventory would have consumed total cost, therefore the cost of ending work-in-process would be:

    cost of ending wip inventory = (3500*$4.80) + (350*$1.40)

    Cost of ending wip = $17290

    c - cost of beginning wip and current manufacturing cost?

    Cost of beginning wip and current manufacturing cost would be the total cost of finished stock and ending work-in-process inventory (i. e adding answer of a and b)

    cost = $54000+$17290

    cost = $71290
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