Hello Jenny,
I think the answer is:
$22.0 .
Total equivalent Polyester units completed in June = (700 x 100%) + [(1500 - 700) x 25%] =
900 dresses
Total direct Material cost for equivalent units = $22,500 x (900 / 1500) =
$13,500 ... (Remainder balance of $9,000 for ending inventory)
Conversion cost allocation = $13,300 x 900 / (1,000 + 900) =
$6,300 for Polyester dresses
Total manufacturing cost for Polyester dresses = $13,500 + $6,300 =
$19,800Manufacturing cost per unit = $19,800 / 900 = $22.0
Note:Conversion cost of $13,300 is combined of direct labor & manufacturing overhead costs for both Cotton & Polyester lines. Allocated between Cotton & Polyester dresses based on equivalent finished products.
Hope this demonstration will be clear for you
Kind regards
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Samer Ahmad, FMVA, SCA
Kuwait
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Original Message:
Sent: 03-15-2020 01:02 AM
From: Jenny Turnham
Subject: Answer for Process Costing
Can anyone show how to solve this problem? I try to work on it but the result is not on the multiple choice. Thank you.
Fashion Inc. manufactures women's dresses using cotton and polyester. Since the same style dresses are made out of both fabrics, Fashions uses operation costing. During June, 1,000 cotton dresses were completely produced. Also during June, 1,500 polyester dresses were started by adding all materials at the beginning of the process. Of these 1,500 dresses, 700 were completely finished and the remainder were 25 percent complete by the end of the month. There was no work-in-process inventory at the beginning of June. Costs incurred during June were as follows.
Cotton | $10,000 |
Polyester | 22,500 |
Conversion costs | 13,300 |
The cost per unit to manufacture one polyester dress during June was:
| $20.32. |
| $29.78. |
| $22.00. |
| $23.87. |
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Jenny Turnham
Student
Brooklyn Park MN
United States
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