Based on the information in the exhibits, enter the appropriate positive whole amounts or unit costs for June

2
0
X
1
in the associated cells. Determine the equivalent units of production
(
EUP
)

Question

Based on the information in the exhibits, enter the appropriate positive whole amounts or unit costs for June
 
2
0
X
1
 ﻿in the associated cells. Determine the equivalent units of production 
(
EUP
)
 ﻿for the following items. EUP 
1
.
 ﻿Materials 
2
.
 ﻿Labor 
3
.
 ﻿Overhead Determine the equivalent cost per EUP for the following items. Cost per EUP 
4
.
 ﻿Materials 
5
.
 ﻿Labor 
6
.
 ﻿Overhead Determine the total cost of the following items. Total cost 
7
.
 ﻿Transferred out 
8
.
 ﻿Ending WIP I just wanted to be sure that you were informed of the percentage of completion of units in process at June 
3
0
,
 ﻿Year 
2
.
 ﻿For the 
2
0
,
0
0
0
 ﻿units in process at the end of the period, the cost of materials is 
1
0
0
%
 ﻿complete, labor is 
5
0
%
 ﻿complete, and overhead is 
2
5
%
 ﻿complete. Let me know if you need anything more. Best, Garth

﻿Cost records for June Machining Materials $
2
4
0
,
0
0
0
 ﻿Labor

1
4
0
,
0
0
0
 ﻿Overhead

6
5
,
0
0
0

﻿Production statistics for June Year 
2
 ﻿Machining Units in process, June 
1
,
 ﻿Year 
2

0
 ﻿Units transferred from preceding department

0
 ﻿Units started in product

VIPSolutions · Accepted Answer

Let's break down the requirements and solve each step:

## **Given Data**

- **Cost records for June (Machining Department):**
  - Materials: $240,000
  - Labor: $140,000
  - Overhead: $65,000

- **Production statistics for June Year 2:**
  - Units in process, June 1: **0**
  - Units started in production: **80,000**
  - Units completed & transferred out: **60,000**
  - Units in process, June 30: **20,000**  
    - % complete: Materials **100%**, Labor **50%**, Overhead **25%**
  - Units spoiled: **0**

---

## **Step 1: Calculate Equivalent Units of Production (EUP)**

### 1. **Materials**

- Units transferred out: 60,000 × 100% = **60,000**
- Ending WIP: 20,000 × 100% = **20,000**
- **EUP (Materials) = 60,000 + 20,000 = 80,000**

### 2. **Labor**

- Units transferred out: 60,000 × 100% = **60,000**
- Ending WIP: 20,000 × 50% = **10,000**
- **EUP (Labor) = 60,000 + 10,000 = 70,000**

### 3. **Overhead**

- Units transferred out: 60,000 × 100% = **60,000**
- Ending WIP: 20,000 × 25% = **5,000**
- **EUP (Overhead) = 60,000 + 5,000 = 65,000**

---

## **Step 2: Calculate Cost per Equivalent Unit**

### Formula:
$$
\text{Cost per EUP} = \frac{\text{Total Cost}}{\text{EUP}}
$$

### 4. **Materials**
- Cost per EUP = $240,000 / 80,000 = **$3.00**

### 5. **Labor**
- Cost per EUP = $140,000 / 70,000 = **$2.00**

### 6. **Overhead**
- Cost per EUP = $65,000 / 65,000 = **$1.00**

---

## **Step 3: Calculate Total Costs**

### 7. **Transferred Out (60,000 units):**
$$
\text{Transferred Out} = (\text{Materials} + \text{Labor} + \text{Overhead}) \times 60,000
$$
$$
= (3.00 + 2.00 + 1.00) \times 60,000 = \$6.00 \times 60,000 = \$360,000
$$

### 8. **Ending WIP (20,000 units):**
- Materials: 20,000 × $3.00 = $60,000
- Labor: 10,000 × $2.00 = $20,000
- Overhead: 5,000 × $1.00 = $5,000  
- **Total Ending WIP = $60,000 + $20,000 + $5,000 = $85,000**

---

## **Final Summary Table**

| **Item**                  | **Value**         |
|---------------------------|-------------------|
| **1. EUP - Materials**    | 80,000            |
| **2. EUP - Labor**        | 70,000            |
| **3. EUP - Overhead**     | 65,000            |
| **4. Cost/EUP - Materials** | $3.00           |
| **5. Cost/EUP - Labor**     | $2.00           |
| **6. Cost/EUP - Overhead**  | $1.00           |
| **7. Total Cost - Transferred Out** | $360,000 |
| **8. Total Cost - Ending WIP**      | $85,000  |

---

## **Explanation**

- **EUP** reflects how much work (in units) is considered completed for each cost category, given different completion percentages for materials, labor, and overhead.
- **Cost per EUP** is the average cost to process one equivalent unit for each cost category.
- **Transferred Out** cost includes the full cost for all completed and transferred units.
- **Ending WIP** cost is calculated using the fractional completion for labor and overhead, since those units are not fully completed.

**Let me know if you need the step-by-step calculations or further explanations!**

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