Step by step painting prepares and packages paint products. Step by Step painting has two departments: Blending and Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:Gallons Beginning Work-in-Process Inventory 0 gallonsStarted in production 9,500 gallonsCompleted and transferred out to Packaging in May 6,000 gallonsEnding Work-in-Process Inventory (20% of the way through the blending process) 3,500 gallonsCosts Beginning Work-in-Process Inventory $0Costs added during May: Direct materials 5,700Direct labor 2,085Manufacturing overhead allocated 2,004Total costs added during May $9,789Required:What are the following conversion costs:1. Completed and transferred out2. Ending work-in-process3. Total units accounted for

1. Completed Units Conversion Costs= $ 3661.8

2. Ending work-in-process Conversion Costs  $ 427

3.Total Units Accounted For                9500  

Explanation:

Given Data

Beginning Work-in-Process Inventory 0 gallons

Started in production 9,500 gallons

Completed and transferred out  in May 6,000 gallons

Ending Work-in-Process Inventory (20% of the way through the blending process) 3,500 gallons

Costs Beginning Work-in-Process Inventory $0

Costs added during May:

Direct materials 5,700

Direct labor 2,085

Manufacturing overhead allocated 2,004

Conversion Costs = 4089

Total costs added during May $9,789

Completed and transferred out:

Materials  9500 Units

Conversion 7050 Units

Particulars           Units       % of Completion                 Equivalent Units

                                            Materials Conversion      Materials Conversion

Completed &

Transferred out   6,000        100          100                 6000        6000

Ending WIP          3500          100          20                 3500          700

Total Equivalent Units                                                 9500          6700

First we find the Equivalent units and then Cost per equivalent unit.

Conversion Costs Per Equivalent Units = Total Conversion Costs / Conversion EUP

Conversion Costs Per Equivalent Units = 2,085+2,004/ 6700

                                                                 = $ 0.61 per equivalent unit

Now we multiply the Cost PER EUP to find the costs accounted for

Conversion Costs Accounted For :

1. Completed Units= 6000* 0.61=  $ 3661.8

In Process = 700* 0.61=  $ 427

Total Conversion Costs  = $ 4088.8

Now these costs are equal to the conversion costs given in the data = 2085+ 2004= $ 4089. The difference is due to rounding off decimal numbers.

2. Ending work-in-process

In Process = 700* 0.61=  $ 427

3. Total Units Accounted For

Beginning Work-in-Process Inventory 0 gallons

Started in production 9,500

Total  Units                9500

Completed and transferred out  6,000 gallons

Ending Work-in-Process Inventory  3,500 gallons

Total Units Accounted For                9500