Question

Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

	Direct Materials				Conversion Costs
Units completed		48,000				48,000
Add: Units in ending work in process ×
Percentage complete:
17,000 × 100% direct materials		17,000				—
17,000 × 40% conversion materials		—				6,800
Eqivalent units of output		65,000				54,800
Costs:
Work in process, December 1:
Direct materials						$60,000
Conversion costs						12,000
Total work in process						$72,000
Current costs:
Direct materials						$500,000
Conversion costs						186,000
Total current costs						$686,000

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Units completed	$
Cost of EWIP
Total costs assigned (accounted for)	$

Reconciliation
Cost to account for:

BWIP	$
Current (December)
Total	$

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $3.53 ($60,000/17,000), and the December unit materials cost is $10.42 ($500,000/48,000). The equivalent units in BWIP are 17,000, and the FIFO equivalent units are 48,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

Answer 1

Answer 1:

Answer 2:

Working:

Answer 3:

Units completed = 48000

Which will consists of:

BWIP of 17,000 units completed plus

31,000 units of completed out of units started in December.

Hence:

Weighted average cost of material = (3.53 * 17000 + 10.42 * 31000) / (17000 + 31000) = $7.98