MasterCom Corporation corporation produces a semiconductor chip used on communications. the direct materials are added at hte start of the production process while conversion costs are added uniformly throughout the production process. big band had no inventory at the start of june. during the month it incurred direct material cost of $935,750 and conversion costs of $4,554,000. big band started 475,000 chips and completed 425,000 of them in june. ending inventory was 50% complete as to conversion costs.

Compute:
a. The equivalent units of work done in June.
b. The total manufacturing cost per chip. Allocate the total costs between the completed chips and those in ending inventory.

A-The correct units of work done, equivalent to the units produced, will be computed by using the formula as 450,000 units. B- The total manufacturing cost per chip will be computed as 12.99 US Dollars.

The computation of the equivalent units of work done and the total cost of manufacturing of one semiconductor chip can be calculated using the methods as given under.

The calculation of equivalent units of work done can be done by applying the given values to the following formula.

[tex]\rm Equivalent\ Units\ of\ Work\ Done= Units\ Completed- 50\%\ of\ Units\ Under\ Process[/tex]

Applying values to the given formula, we get,

[tex]\rm Equivalent\ Units\ of\ Work\ Done= 425000+25000[/tex]

We've computed units under production as 50% of the units i.e., 25000 units. We finally get,

[tex]\rm Equivalent\ Units\ of\ Work\ Done= 425000\ units[/tex]

Now, calculating the cost of manufacturing one semiconductor chip can be calculated using the formula below,

[tex]\rm Cost\ of\ Manufacturing\ per\ Unit= \dfrac{Total\ Cost\ of\ Manufacturing}{No.\ of\ Units}[/tex]

Inserting the given values in the formula by summation of direct material costs and conversion costs, which comes down to $5489750.

[tex]\rm Cost\ of\ Manufacturing\ per\ Unit= \dfrac{5489750}{450000}\\\\\\\rm Cost\ of\ Manufacturing\ per\ Unit= \$12.19[/tex]

Hence, equivalent units of work done is calculated as 450000 units and the Cost of manufacturing per chip is calculated as $12.19 using the methods as aforementioned.

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