Question 1
When a company has no opening or ending inventory during the month, the cost per unit is calculated by dividing the total costs incurred in the period by the total units produced during the period.
◦ true
◦ false
Question 2
Big Bernard Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer 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. June is Big Bernard's first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $950,000, while conversion costs equaled $4,625,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed.
Ending inventory was 50% complete as to conversion costs.
Required:
| a. | What is the total manufacturing cost per chip for June? |
| b. | Allocate the total costs between the completed chips and the chips in ending inventory. |
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