Homework Chapter 17
The Parson Valve Corporation was recently formed to produce a brass valve that forms an essential part of a
compressor manufactured by a major corporation. The direct materials are added at the start of the production
process while conversion costs are added uniformly throughout the production process. September is Parson's
first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month
totaled $1,400,000, while conversion costs equaled $1,800,000. Accounting records indicate that 800,000 valves
were started in September and 700,000 valves were completed.
Ending inventory was 20% complete as to conversion costs.
What is the total manufacturing cost per valve for September?
Allocate the total costs between the completed valves and the valves in ending inventory.
Cost to account for
Divided by equiv. units
Cost per equivalent units
Equivalent unit for conversion costs =
700,000 completed + (100,000 × 0.2 completed) =
700,000 + 20,000 = 720,000
Completed units = $4.25 × 700,000 =
Ending work in process = Direct materials = 100,000 × $1.75 =
Conversion costs = 20,000 × $2.50 =