Costing Systems and Analysis-Adams Ski Company
| Calculation of equivalent units | |||
| Units | Percentage Completion | Equivalent Units | |
| Transferred to finished goods | 4050 | 100% | 4050 |
| Ending Inventory | 470 | 50% | 235 |
| Total Equivalent units | 4,285 | ||
| Cost per equivalent unit | Cost per equivalent unit is obtained by dividing the total product costs by the total equivalent units at the end of the period.
= $278,525 ÷ 4,285 = $65 per unit |
| Allocation to finished goods | Cost of finished goods = total units transferred to finished goods × cost per unit
= 4,050 × $65 = $263,250 |
| Allocation to ending inventory | Allocation to ending inventory = multiplying the cost remaining from the allocation to the finished goods
= $65 × 235 = $15,275
|
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Question 
Adams Ski Company manufactures snow skis. During the most recent accounting period, the company’s finishing department transferred 4,050 sets of skis to finished goods. At the end of the accounting period, 470 sets of skis were estimated to be 50 percent complete. Total product costs for the finishing department amounted to $278,525.
Costing Systems and Analysis-Adams Ski Company
Required
Determine the cost per equivalent.
Determine the cost of the goods transferred out of the finishing department.
Determine the cost of the finishing department’s ending work in process inventory.
Adams Ski Company manufactures snow skis. During the most recent accounting period, the company’s finishing department transferred 4,050 sets of skis to finished goods. At the end of the accounting period, 470 sets of skis were estimated to be 50 percent complete. Total product costs for the finishing department amounted to $278,525.
Required
Determine the cost per equivalent.
Determine the cost of the goods transferred out of the finishing department.
Determine the cost of the finishing department’s ending work in process inventory.