1.

Answer:

(a) Compute the Cost of Goods Manufactured:

Cost of Goods Manufactured = (Direct Materials + Direct Labor + Manufacturing Overhead) +

Beginning Work-in-Process Inventory - Ending Work-in-Process Inventory

Direct Materials: $115,000

Direct Labor: $80,000

Manufacturing Overhead: (Depreciation on factory equipment + Property taxes on plant + Indirect

material + Factory supplies used + Indirect labor) = ($30,000 + $18,000 + $20,000 + $25,000 +
$25,000) = $118,000

Beginning Work-in-Process Inventory: $27,500

Ending Work-in-Process Inventory: $24,000

Cost of Goods Manufactured = ($115,000 + $80,000 + $118,000) + $27,500 - $24,000

Cost of Goods Manufactured = $313,000 + $3,500

Cost of Goods Manufactured = $316,500

(b) Compute the Cost of Goods Sold:

Cost of Goods Sold = (Beginning Finished Goods Inventory + Cost of Goods Manufactured) - Ending
Finished Goods Inventory

Beginning Finished Goods Inventory: $62,500

Cost of Goods Manufactured (calculated in part a): $316,500

Ending Finished Goods Inventory: $32,000

Cost of Goods Sold = ($62,500 + $316,500) - $32,000

Cost of Goods Sold = $379,000 - $32,000

Cost of Goods Sold = $347,000

So, the cost of goods manufactured is $316,500, and the cost of goods sold is $347,000.

2. Answer:

(a) Compute the equivalent units of production for materials and conversion costs for the month of
September:

Equivalent Units of Production (Materials):

 Beginning inventory: 2,800 units * 100% = 2,800 equivalent units

 Units started during the period: 12,000 units * 100% = 12,000 equivalent units
  Ending inventory: 3,000 units * 20% = 600 equivalent units Total equivalent units for
materials = 2,800 + 12,000 - 600 = 14,200 equivalent units

Equivalent Units of Production (Conversion Costs):

 Beginning inventory: 2,800 units * 30% = 840 equivalent units

 Units started during the period: 12,000 units * 100% = 12,000 equivalent units

 Ending inventory: 3,000 units * 20% = 600 equivalent units Total equivalent units for
conversion costs = 840 + 12,000 - 600 = 12,240 equivalent units

(b) Compute the unit costs for materials and conversion costs for the month:

Unit Cost for Materials:

 Total materials costs for the month = Beginning inventory costs + Materials costs
added during the month
 Total materials costs for the month = $32,000 + $112,300 = $144,300
 Unit cost for materials = Total materials costs / Total equivalent units for materials
 Unit cost for materials = $144,300 / 14,200 equivalent units = $10.14 per equivalent
unit

Unit Cost for Conversion Costs:

 Total conversion costs for the month = Beginning inventory costs + Labor applied +
Overhead applied
 Total conversion costs for the month = $29,100 + $100,020 + $283,800 = $412,920
 Unit cost for conversion costs = Total conversion costs / Total equivalent units for
conversion costs
 Unit cost for conversion costs = $412,920 / 12,240 equivalent units = $33.75 per
equivalent unit

(c) Determine the costs to be assigned to the units transferred out and in process:

Costs for Units Transferred Out:

Units transferred out = Units started during the period - Ending inventory

Units transferred out = 12,000 - 3,000 = 9,000 units

Cost for units transferred out = Units transferred out * (Unit cost for materials + Unit cost for
conversion costs)

Cost for units transferred out = 9,000 * ($10.14 + $33.75) = $ 395,010

Costs for Units in Process (Ending Inventory):

Cost for units in ending inventory = Ending inventory (conversion costs only) * Unit cost for
conversion costs

Cost for units in ending inventory = 600 * $33.75 = $20,250

So, the costs to be assigned to the units transferred out are $ 395,010, and the costs for units in the
ending inventory are $20,250.