Managerial Accounting
Managerial Accounting
16th Edition
ISBN: 9781259995484
Author: Ray Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 4, Problem 1AE
To determine

Total cost of units transferred out.

Unit of goods completed in the production process and transferred to other department during in the period, cost incurred to this completed goods which includes material and conversions jointly is known as total cost of units transferred out.

Total cost of the units transferred out and its cost is changed or not.

Expert Solution & Answer
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Answer to Problem 1AE

Solution:

    Costs per equivalent unit Materials Conversion
    Cost of beginning work in process inventory 9600

    5575

    Cost added during the period 368600 350900
    Total Cost 378200 356475
    Equivalent unit of production 2480 2450
    Cost per equivalent unit 152.50 145.50

Total cost of the units transferred out is $715,200.

Yes, total cost of the units transferred out was changed because current equivalent unit of production was decreased at the same time cost per equivalent unit has increased.

Explanation of Solution

Explanations:

Formulas used:

   Total cost = Cost of beginning work in process inventory+ cost added during the period

  Equivalent unit of production = Units complete and transferred during in the period                                                + ending working in process completion percentage.

  Cost per equivalent unit = Total cost / Equivalent unit of production.

  Units complete and transferred during in the period = Total units  ending                                                                                      work in process ending inventory. 

  Total cost of the units transferred out= Production units completed during in the period *                                                                                  total cost per equivalent unit. 

Calculations:

    Total cost for material= $9600 + $368600=$378,200

    Total cost for conversion= $5575+$350900=$356475

    Equivalent unit of production for materials = 2400 units +80 units (200 units *40/100=80) =2480units

    Equivalent unit of production for conversion = 2400 units +50 units (200 units * 25/100=50) =2450 units.

    Cost per equivalent unit for material = $378,200 / 2480units = $152.50

    Cost per equivalent unit for conversion=$356475 / 2450 units = $145.50

    Units complete and transferred during in the period = 2500 units -100 units=2400

    Total cost of the units transferred out = 2400 * $298 ($152.50+$145.50=$298) =$715,200.

Conclusion

Above calculation derived given cost per equivalent unit for materials as well as conversion also derived total cost of the units transferred and above explanation stated total cost of the units transferred out was changed.

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Chapter 4 Solutions

Managerial Accounting

Ch. 4.A - Prob. 11PCh. 4.A - Prob. 12CCh. 4.B - Prob. 1ECh. 4.B - EXERCISE 4B-2 Step-Down Method LO4-11 Madison Park...Ch. 4.B - Prob. 3ECh. 4.B - EXERCISE 4B-4 Direct Method LO4-10 Refer to the...Ch. 4.B - PROBLEM 4B-5 Step-Down Method L04-11 Woodbury...Ch. 4.B - PROBLEM 4B-6 Step-Down Method versus Direct...Ch. 4.B - CASE 4B-7 Step-Down Method versus Direct Method...Ch. 4 - Prob. 1QCh. 4 - In what ways are job-order and process costing...Ch. 4 - Why is cost accumulation simpler in a process...Ch. 4 - How many Work in Process accounts are maintained...Ch. 4 - Prob. 5QCh. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 1AECh. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that...Ch. 4 - Clopack Company manufactures one product that...Ch. 4 - Clopack Company manufactures one product that...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Prob. 12F15Ch. 4 - Clopack Company manufactures one product that...Ch. 4 - Prob. 14F15Ch. 4 - Prob. 15F15Ch. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - EXERCISE 4-4 Assigning Costs to...Ch. 4 - EXERCISE 4-5 Cost Reconciliation...Ch. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - EXERCISE 4-9 Equivalent Units and Cost per...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - PROBLEM 4-16 Comprehensive...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19CCh. 4 - ( CASE 4-20 Ethics and the Manager, Understanding...
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