Question

Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures 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 processing in Stitching, the other three models are transferred to Customizing for additional add-ons, and then transferred to finished goods.

There were no beginning work-in-process inventories on August 1. Data for August are shown in the following table. Ending work in process is 30 percent complete in Stitching and 55 percent complete in Customizing. Conversion costs are allocated based on the number of equivalent units processed in each department.

	Total			Rookie			Novice			Hiker			Expert
Units started					780			490			280			210
Units completed in Stitching					710			430			235			165
Units completed in Customizing								420			215			155
Materials	$	57,890		$	21,840		$	15,190		$	10,360		$	10,500
Conversion costs:
Stitching	$	54,260
Customizing		27,000
Total conversion costs	$	81,260

Required:

a. What is the unit cost of each model transferred to finished goods in August? (Round intermediate calculations to nearest whole number.)

Product	Unit Cost
Rookie
Novice
Hiker
Expert

b. What is the balance of the Work-in-Process Inventory on August 31 for Stitching? For Customizing? (Round intermediate calculations to nearest whole number.)

	WIP Inventory
Stitching
Customizing

Answer 1

Solution The question requires calculation of Unit cost of model transferred to finished goods & balance in work-in-progress inventory on August 31. Miller Outdoor Equipment (MOE) - Stiching Dept. Rookie model Customizing Dept. Finished Good Novice Hiker Popom Finished Good 45 Calculation of equivalent no. of units in Stiching Dept. : Rookie Novice Hiker Expert units completed in 710 430 235 165 Stitching (AT i unite in work-in- progress (WIP) Equivalent no. of 21 13.50 units in WIPLA Total units 731 448 248.50 [C= A +B) 13.50 178.50

Rookie 731 Expert Novice 448 Hiker 248.50 178.50 Units in Stitching Dept. 24,697,42 15,136.04 8395,77 603021 21840 15190 46537.42 30326.04 431 I 448 T 10,360 18765.72 248.50 LOSDO! 16530.77 178.50 Stitching cost [Based on a. of units Material cost Cost Total & Equivalent units cost per unit Cost: Finished Good lowip 6 Try to custa Dept 67.69 75.48 92.61 45,198.60 2338,82 - 12 19.34 1014.971250. 29,106,70 17737.80 15280,65 Calculation of Equivalent units for customization Dept. : Novice Hiker Expert Units transferred from 430 236 165 Stitching Dept. Units completed in Customizing 420 | 215 Units in WIP lo equivalent units in wIP [8] 5,5 Total Equivalent units in 425.50 customizing Dept. (C: A+B) 155 ID 5.50 160.60

cost in Customizing Dept.. Novice Hiker Equivalent no. of units 425.50 226 customizing cost 14148.40 7514.78 Cost till stitching Dept | 29 106.70 17,737,80 Total cost 43255.10 25252.58 & Equivalent no. of units 425.50 226 cost per unit 1101.66 [111.74 Cost: • Finished Geode 43,713.80 24024. I • WIP 458.70 1228.48 Expert 160.50 5336.82 15,280.65 20,617.97 160.50 128.46 19911.30 70617 Answers : (a) unit cost of each modes transferred to finished goods in August, Product Unit cost 63.66 Novice 101.66 Hiker (11.74 128.46 Rookie Expert 0 Balance of WIP: WIP Inventory - units & Customizing 140 2393.35 4826,25 220 Stitching