See attached document titled "Problem Operations Costing: Work-in-Process Inventory" to see the charted data for this problem.
Miller Outdoor Equipment makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. Miller Manufacturers the tents in two departments: Stitching and Customizing. All four models are processed initially in Stitching where all material is assembled and sewn into a basic tent. The Rookie model is then transferred to finished goods. After the initial process in Stitching, the other three models are transferred to Customizing for additional add-ons and then finally transferred to finished goods.
There were no beginning work-in-process inventories on August 1. Data for August is shown in the attached table. Ending work-in-process is 40 percent completed in Stitching and 20 percent complete in Customizing. Conversion costs are allocated based on the number of equivalent units processed in each department.
1. What is the unit cost of each model transferred to finished goods in August?
2. What is the balance of the Work-in-Process Inventory on August 31 for Stitching? For Customizing?
See attached document titled "Operation Costing - "Work-in-Process Inventory: Miller Outdoor ...
This questions asks reader to find unit costs of models of different types of tents for an outdoor equipment company and the balance of their Work-in-Process inventory.
The solution to this problem is to apply process costing methods for the conversion costs and then add the cost of materials for each product. The five-step process of assigning costs to products is shown in this example.
The problem shown here are taken from Fundamentals of Cost Accounting, 3rd ed,, McGraw-Hill Publishing, however, the detail step-by-step explanation of this complicated topic provides students with a clear understanding of the concept.