Production costs chargeable to the Finishing Department in June in Hollins Company are materials $15,398, labor $39,891, overhead $18,800. Equivalent units of production are materials 20,260 and conversion costs 19,180. Production records indicate that 18,100 units were transferred out, and 2,160 units in ending work in process were 50% complete as to conversion cost and 100% complete as to materials.

Prepare a cost reconciliation schedule.

Answer and Explanation:

Cost per equivalent unit = Production cost / Equivalent units

Material cost per equivalent unit = $15,398 / 20,260 = $0.76

Conversion cost per equivalent unit = ($39,891 + $18,800) / 19,180 = $3.06

Cost Reconciliation Schedule:

Cost accounted for:

Transferred out [18,100 x ($0.76 + $3.06)]                        $69,142

Work in process:

Materials (2,160 x $0.76)                                 $1,642

Conversion costs (2,160 x $3.06 x 0.5)         $3,305

                                                                                             $4,947

Total cost accounted for                                                     $74,089

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