Goodson Corporation assembles various components used in the telecommunications industry. The company's major product, a relay switch, is the result of assembling three parts: XY634, AA788, and GU321. The following information relates to activities of April:
Beginning work-in-process inventory: 4,000 units, 75 percent complete as to conversion; cost, $286,000 (direct materials, $220,000; conversion cost, $66,000).
Production started: 25,000 units.
Production completed: 24,000 units.
Ending work-in-process inventory: 5,000 units, 40 percent complete as to conversion.
Direct materials used: XY634, $267,000; AA788, $689,000; GU321, $448,000.
Hourly wage of direct laborers, $20; total direct-labor payroll, $126,500.
Overhead application rate: $60 per direct-labor hour.
All parts are introduced at the beginning of Goodson's manufacturing process; conversion cost is incurred uniformly throughout production.
1. Calculate the total cost of direct material and conversion during April.
Direct material $
2. Determine the cost of goods completed during the month.
Cost of goods completed $
3. Determine the cost of the work-in-process inventory on April 30. Cost of the work-in-process inventory $
4. With regard to the ending work-in-process inventory:
a. How much direct-material cost would be added to these units in May?
Direct Material cost $
b. What percentage of conversion would be performed on these units in May?
Percentage of conversion %
5. Assume that the relay switch required the addition of another part (HH887) at the 70 percent stage of completion. How many equivalent units with respect to part HH887 would be represented in Aprilâ??s ending work-in-process inventory?
The solution determines the cost of direct materials, goods completed and WIP inventory.