Question

In: Accounting

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking....

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given below:

Work in Process—Grinding Department
Inventory, May 1 317,520 Completed and transferred
to the Mixing Department
?
Materials 908,010
Conversion 538,050
Inventory, May 31 ?

The May 1 work in process inventory consisted of 81,000 pounds with $193,590 in materials cost and $123,930 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 30% complete with respect to conversion. During May, 351,000 pounds were started into production. The May 31 inventory consisted of 77,000 pounds that were 100% complete with respect to materials and 60% complete with respect to conversion. The company uses the weighted-average method in its process costing system.

Required:

1. Compute the Grinding Department's equivalent units of production for materials and conversion in May.

2. Compute the Grinding Department's costs per equivalent unit for materials and conversion for May.

3. Compute the Grinding Department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the Grinding Department's cost of units transferred out to the Mixing Department for materials, conversion, and in total for May.

Solutions

Expert Solution

UNITS TO BE ACCOUNTED FOR: Physical Units
Work in process, May 1 81000
Started into production during June 351000
Total Units 432000
UNITS ACCOUNTED FOR: Equivalent Units
Physical Units Direct Material Conversion Costs
Units completed and transferred 355000 355000 355000
Work in process, May 31 77000 77000 46200
1) Equivalent units 432000 432000 401200
COSTS TO ACCOUNT FOR: Direct Material Conversion Costs Total Cost
Cost of WIP, May 1 $        1,93,590 $     1,23,930 $      3,17,520
Costs incurred in May $        9,08,010 $     5,38,050 $   14,46,060
Total costs to account for $     11,01,600 $     6,61,980 $   17,63,580
Equivalent units 432000 401200
2) Cost per equivalent unit $                2.55 $             1.65
COSTS ACCOUNTED FOR:
4) Cost of units completed and transferred $        9,05,250 $     5,85,750 $   14,91,000
3) Cost of ending WIP $        1,96,350 $         76,230 $      2,72,580
Total costs accounted for $     11,01,600 $     6,61,980 $   17,63,580

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