Racquet Master (RM) Sports manufactures and distributes two types of tennis rackets: Dominant Drive (DD) and Major Smash (MS). Both types of rackets go through Operations 1 and 3. MS also goes through Operation 2, which adds a layer of graphite for additional strength. All material is added at the beginning of their respective operations.The following information relates to a work order from Discount Warehouse, Inc. for 30,000 units of DD (Work order #286) and 8,000 units of MS (Work order #354). Work order #286Work order #354?Direct materials: ?Operation 1$120,000 $80,000 ?Operation 2 --- 20,000 ?Operation 3 45,000 30,000 ?Conversion costs: Operation 1 30,000 15,000 Operation 2 --- 25,000 Operation
3 14,793 14,896 Required:Assume that there are 3,000 units of DD and 2,000 units of MS in Operation 3 at the end of the reporting period that are 45% and 65% complete, respectively. Compute the ending inventory for Operation 3.
What will be an ideal response?
Job 286:
Materials: ($120,000 + 45,000)/30,000 = $5.50/unit
EUP: (30,000 - 3,000) + (3,000 × 45%) = 27,000 + 1,350 = 28,350
Conversion cost: ($30,000 + 14,793)/28,350 = $1.58
Ending Inventory: (3,000 × $5.50) + [(3,000 x 45%) × $1.58] = $16,500 + 2,133 = $18,633
Job 354:
Materials: ($80,000 + 20,000 + 30,000)/8,000 = $16.25/unit
EUP: (8,000 - 2,000) + (2,000 × 65%) = 6,000 + 1,300 = 7,300
Conversion cost: ($15,000 + $25,000 + $14,896)/7,300 = $7.52
Ending Inventory: (2,000 × $16.25) + [(2,000 x 65%) × $7.52] = $32,500 + 9,776 = $42,276
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