Chapter 20, Problem 22QS

To determine

Concept Introduction:

Costs assigned to Units transferred and units in ending inventory:

The costs are assigned to units transferred and units in ending inventory on the basis of equivalent units in materials and conversion and cost per units assigned.

The costs assigned to units transferred are calculated as under −

  $\begin{array}{l}Costsassignedtounitstransferred=EquivalentunitsofmaterialsXCostperequivalentunits\hfill \\ +EquivalentunitsofconversionXCostperequivalentunits\hfill \end{array}$

The costs assigned to ending inventory are calculated as under −

  $\begin{array}{l}Costsassignedto\text{ ending inventory }=EquivalentunitsofmaterialsXCostperequivalentunits\hfill \\ +EquivalentunitsofconversionXCostperequivalentunits\hfill \end{array}$

To assign:

Costs to the roasting department's output for −

1. Units transferred out
2. Units in ending inventory (units that remain n process in the roasting department at month-end)

Answer to Problem 22QS

Solution:

Costs assigned for −

1. Units transferred out = $ 23,250
2. Units in ending inventory = $ 3,720

Explanation of Solution

The costs assigned to units transferred out and to units in ending inventory are calculated as under −

1.  Costs assigned to units transferred out −

Given,

• Equivalent units for units transferred for materials =15,000 units
• Cost per equivalent unit for materials = $ 1.55 per unit

  $\begin{array}{l}Costsassignedto\text{ transferred out}=EquivalentunitsofmaterialsXCostperequivalentunits\hfill \\ \begin{array}{l}\\ Costsassignedto\text{ transferred out}=(15,000unitsX\$1.55perunit)\\ Costsassignedto\text{ transferred out}=\$23,250\\ \end{array}\hfill \end{array}$

The costs assigned to units transferred out are = $ 23,250

2. Costs assigned to Ending inventory units −

Given,

• Equivalent units for ending inventory for materials = 2,400 units
• Cost per equivalent unit for materials = $ 1.55 per unit

  $\begin{array}{l}Costsassignedto\text{ ending inventory}=EquivalentunitsofmaterialsXCostperequivalentunits\hfill \\ \begin{array}{l}\\ Cstsassignedto\text{ ending inventory}=(2,400unitsX\$1.55perunit)\\ stsassignedto\text{ ending inventory}=\$3,720\end{array}\hfill \end{array}$

The costs assigned to units that remain in roasting department (Ending inventory units) are = $ 3,720.

Conclusion

Thus, the costs to the roasting department's output for units transferred out and units in ending inventory have been assigned.