Overton Company has gathered the following information. Units in beginning work in process 20,300 Units started into production 185,700 Units in ending work in process 24,900 Percent complete in ending work in process: Conversion costs 60 % Materials 100 % Costs incurred: Direct materials $103,000 Direct labor $333,306 Overhead $186,200 Required:
a. Compute equivalent units of production for materials and for conversion costs.
b. Determine the unit costs of production.
c. Show the assignment of costs to units transferred out and in process.

a. Materials = 206,000 units and Conversion costs = 196,040 units

b. Materials = $0.50 and Conversion costs = $2.65

c. Costs to units transferred out = $570,465 and Costs to units in process =  $59,511

Explanation:

a. Calculation of Equivalent Units of Production for Materials and for Conversion costs

Units Completed and Transferred  = Units in beginning work in process + Units started into production - Units in ending work in process

                                                          = 20,300 +  185,700 - 24,900

                                                          = 181,100

Materials

Units Completed and Transferred (181,100 × 100%) =    181,100

Units in Ending Work in Process (24,900 × 100%)   =    24,900

Equivalent Units of Production                                  = 206,000

Conversion costs

Units Completed and Transferred (181,100 × 100%) =    181,100

Units in Ending Work in Process (24,900 × 60%)    =     14,940

Equivalent Units of Production                                  =  196,040

b. Calculation of  the unit costs of production.

Unit costs of production = Total Cost / Equivalent Units of Production

Materials = $103,000 / 206,000

               = $0.50

Conversion costs = ($333,306 + $186,200) / 196,040

                             = $2.65

Total Unit Cost = $0.50 + $2.65

                         = $3.15

c. Assignment of costs to units transferred out and in process.

Costs to units transferred out = 181,100 × $3.15

                                                 = $570,465

Costs to units in process

Materials  ($0.50 × 24,900)             = $12,450

Conversion costs  ($3.15 × 14,940)  = $47,061

Total Cost                                         =  $59,511