Amber Division of Roces Corp produces environmental paints.Amber adds 40% of materials at the start of the process, additional20% when upon 30% conversion, additional 30% once the productis half completed and the balance at the end of the process.Management considers normal spoilage to be 5% of total units putinto production this period. Inspection point is done upon 40%conversion. The following operating statistics are available forAugust.GallonsCostWork in process, 8/1, 20% converted10,000Materials41,420.00Conversion Cost5,040.00Started during August50,000Materials112,500.00Conversion Cost191,200.00Work in process, 8/31, 30% converted12,000Spoiled3,0001. What is the equivalent unit of production for direct materials?2. How much is the amount to be charged against current income immediately?3. How much is the total cost of units transferred out?T

Equivalent units of production are created when a certain number of partially finished units are…

Answered: 1. What is the equivalent unit of…

1. What is the equivalent unit of production for direct materials? 2. How much is the amount to be charged against current income immediately? 3. How much is the total cost of units transferred out?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Amber Division of Roces Corp produces environmental paints.
Amber adds 40% of materials at the start of the process, additional
20% when upon 30% conversion, additional 30% once the product
is half completed and the balance at the end of the process.
Management considers normal spoilage to be 5% of total units put
into production this period. Inspection point is done upon 40%
conversion. The following operating statistics are available for
August.
Gallons
Cost
Work in process, 8/1, 20% converted
10,000
Materials
41,420.00
Conversion Cost
5,040.00
Started during August
50,000
Materials
112,500.00
Conversion Cost
191,200.00
Work in process, 8/31, 30% converted
12,000
Spoiled
3,000
1. What is the equivalent unit of production for direct materials?
2. How much is the amount to be charged against current income immediately?
3. How much is the total cost of units transferred out?T

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