Manufacturing cost per unit, process costing & their allocation
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Big Bernard Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation. Thedirect materials are added at the start of the production process while conversion costs areadded uniformly throughout the production process. June is Big Bernard's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $935,000, while conversion costs equaled $4,552,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
a.What is the total manufacturing cost per chip for June?
b.Allocate the total costs between the completed chips and the chips in ending inventory
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Solution Summary
The solution computes the manufacturing cost per unit after the computation of equivalent units/costs. Also, allocation of costs among completed and ending inventories is shown.
Solution Preview
Started during the month = 475,000 chips
Completed during the month = 425,000 chips
Therefore, ending inventory = 475000-425000 = 50,000 ...
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