Reliance Inc. manufactures a single product in one department and uses a process costing system. At the start of May, there were 5,000 units in process that were 100 percent complete with respect to direct materials and 50 percent complete with respect to conversion cost (labor and overhead). During the month, the company began production of 100,000 units and ending work in process inventory consisted of 2,000 units that were 100 percent complete with respect to material and 80 percent complete with respect to conversion costs.
Cost Information: Beginning Cost added
Work-in-process in May
Direct Material $ 3,000 65,250
Direct Labor $ 125 6,151
Manufacturing overhead $ 175 7,147
Total $ 3,300 78,548
Required:
A. Calculate the cost per equivalent unit for each of the three cost items and in total
B. Calculate the cost of items completed in May and the cost of ending work-in-process.
1. What is meant by conversion costs?
2. What is the difference between product and period costs?
3. List 3 differences between financial and managerial accounting.
4. How is incremental analysis used for decision making?
5. List four reasons why indirect costs are allocated.