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Parson Valve Corp total Manufacturing cost; allocate costs

The Parson Valve Corporation was recently formed to produce a brass valve that forms an essential part of a compressor manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. September is Parson's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $1,400,000, while conversion costs equaled $1,800,000. Accounting records indicate that 800,000 valves were started in September and 700,000 valves were completed.

Ending inventory was 20% complete as to conversion costs.


1. What is the total manufacturing cost per valve for September?

2. Allocate the total costs between the completed valves and the valves in ending inventory.

Solution Summary

Your tutorial is in Excel and gives you a template to use for other jobs (that may have beginning balances). click in cells to see computations and formulas. This is the average cost method for process costing.