Question

Exercise 5-12 Equivalent Units; Assigning Costs; Cost Reconciliation-Weighted-Average Method [LO5-2, LO5-4, LO5-5]

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,200 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $760,760 in total. The ending work in process inventory in January consisted of 4,000 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

	Materials			Labor			Overhead
Cost per equivalent unit	$	14.30		$	5.20		$	6.70

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Answer 1

1.

	Physical	Equivalent Units
	Units	Materials		Labor		Overhead
		%	EUP	%	EUP	%	EUP
Ending work in process inventory	4000	80%	3200	60%	2400	60%	2400

2.

	Materials	Labor	Overhead	Total
Equivalent units of production	3200	2400	2400
Cost per equivalent unit $	14.30	5.20	6.70
Cost of ending work in process inventory $	45760	12480	16080	74320

3.

	Materials	Labor	Overhead	Total
Equivalent units of production	26200	26200	26200
Cost per equivalent unit $	14.30	5.20	6.70
Cost of units transferred $	374660	136240	175540	686440

4.

Cost Reconciliation for January
Total Costs to Account for:
Costs of beginning work in process and costs added during January	760760
Total costs to account for $		760760
Total costs accounted for:
Cost of units completed and transferred	686440
Cost of ending work in process inventory	74320
Total costs accounted for $		760760
Difference due to rounding cost/unit $		0