(Hybrid costing) Pat Koontz makes necklaces from glass beads, metal beads, and natural beads. After reading about hybrid costing, she realized that the different types of necklaces did not cost the same amount of money to make, even though they took the same amount of time and effort to assemble. Koontz developed the following standard costs for each type of necklace:
Glass Metal Natural
Beads $24 $15 $ 7
Direct labor (1.5 hours) 15 15 15
Overhead (based on 1.5 hours) 8 8 8
Total $47 $38 $30
Koontz began 2010 with no beginning WIP Inventory after she experienced an extreme holiday rush. During January, 130 necklaces were started: 70 were glass, 25 were metal, and 35 were natural. At the end of January, 25 necklaces were not yet complete: 5 glass,13 metal, and 7 natural. The stage of completion for each cost component for the 25 unfinished necklaces was as follows:
Material 100% complete
Conversion 60% complete
a. Calculate the cost of necklaces completed during January.
b. Calculate the cost of necklaces in ending WIP Inventory.

Question

19-03-2021
Business

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(Hybrid costing) Pat Koontz makes necklaces from glass beads, metal beads, and natural beads. After reading about hybrid costing, she realized that the different types of necklaces did not cost the same amount of money to make, even though they took the same amount of time and effort to assemble. Koontz developed the following standard costs for each type of necklace:
Glass Metal Natural
Beads $24 $15 $ 7
Direct labor (1.5 hours) 15 15 15
Overhead (based on 1.5 hours) 8 8 8
Total $47 $38 $30
Koontz began 2010 with no beginning WIP Inventory after she experienced an extreme holiday rush. During January, 130 necklaces were started: 70 were glass, 25 were metal, and 35 were natural. At the end of January, 25 necklaces were not yet complete: 5 glass,13 metal, and 7 natural. The stage of completion for each cost component for the 25 unfinished necklaces was as follows:
Material 100% complete
Conversion 60% complete
a. Calculate the cost of necklaces completed during January.
b. Calculate the cost of necklaces in ending WIP Inventory.

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anthougo anthougo · Answer 1 · 2021-03-22T20:17:51+01:00

Answer:

Pat Koontz

a. The cost of necklaces completed during January = $96.16

b. The cost of necklaces in ending WIP inventory = $24.40

Explanation:

a) Data and Calculations:

Glass Metal Natural Total

Beads $24 $15 $ 7 $46

Direct labor (1.5 hours) 15 15 15 45

Overhead (based on 1.5 hours) 8 8 8 24

Total cost of production $47 $38 $30 $115

Glass Metal Natural

Units started 70 25 35 130

Ending WIP 5 13 7 25

Units completed 65 12 28 105

Equivalent units:

Glass Metal Natural

Mat. Conv Mat. Conv Mat. Conv

Units completed 65 65 12 12 28 28

Ending WIP 5 3 13 8 7 4

Equivalent units 70 68 25 20 35 32

Cost per equivalent unit:

Glass Metal Natural

Mat. Conv Mat. Conv Mat. Conv Total

Cost of production $24 $23 $15 $23 $7 $23 $115

Equivalent units 70 68 25 20 35 32

Cost per equivalent $0.42 $0.34 $0.60 $1.15 $0.20 $0.72

Glass Metal Natural Total

Mat. Conv Mat. Conv Mat. Conv

Cost per equivalent $0.42 $0.34 $0.60 $1.15 $0.20 $0.72

Equivalent units of

Units completed 65 65 12 12 28 28

Units completed $27.3 $22.1 $7.2 $13.8 $5.6 $20.16 $96.16

Glass Metal Natural Total

Mat. Conv Mat. Conv Mat. Conv

Cost per equivalent $0.42 $0.34 $0.60 $1.15 $0.20 $0.72

Ending WIP (equiva.) 5 3 13 8 7 4

Total cost $2.1 $1.02 $7.8 $9.2 $1.4 $2.88 $24.40