Question

Saba enterprises had 250 units in beginning WIP which were 80% complete with regard to conversion costs. 9,250 units were added during the period. 8,000 units were completed.   Ending WIP was 100% complete with regard to material and 60% complete with regard to conversion. Beginning WIP amounted to $3,500 of which $1,000 was for conversion. Costs added amounted to $132,280 of which $94,870 was for materials.

Required:

1. Compute cost of goods completed and cost of WIP ending using weighted average price method.

2. Compute cost of goods completed and cost of WIP ending using FIFO method.

3. Determine cost per unit of completed goods for last period and this period under both FIFO and weighted average price methods.

Answer 1

Weighted average cost
Beggining units	250	Transferred out	8,000
Started intro production	9250	Ending units	1,500
Units accounted for	9500		9500
Equivalent units	Material	Conversion cost
Units transferred                      A	8000	8000
Ending Units	1,500	1,500
Completion	100%	60%
B	1500	900
Total units	9500	8900
Cost per equivalent units
Particulars	Material	Conversion cost	total
As at beginning	2500	1000	3500
Added during the month	94870	37410	132280
Cost to be accounted for	97370	38410	135780
Total eqivalent units	9500	8900
Cost per equivalent unit	10.25	4.32	14.57
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

Cost of ending work in progress
		Conversion cost
Particulars	Material		Total
Ending units	1,500	1,500
Cost per equivalent units	10.25	4.32
Completion	100%	60%
Total cost	15374	3884	19258
Cost of goods transferred		Conversion cost
Particulars	Material		Total
Number of units	8000	8000
Cost per equivalent units	10.25	4.32	14.57
Total amount	81996	34526	116522

2.

FIFO method
Beggining units	250	Transferred out	8,000
Started into production	9250	Ending units	1,500
	9500		9500
Equivalent units	Material	Conversion
Beginning units	250	250
Completion in current period	0%	20%
A	0	50
Units started and completed	7750	7750
Completion	100%	100%
B	7750	7750
Ending Units	1,500	1,500
Completion	100%	60%
C	1500	900
Total units A+B+C	9250	8700
Cost per equivalent units
Per unit cost	Cost	Total units	Per unit cost
Material cost	94870	9250	10.26
Conversion cost	37410	8700	4.30
Total	132280		14.56

Cost of goods sold	Material	convertion cost
Beginning work in progress A	2500	1000	3500
Beginning inventory completed
Completion	0%	20%
Per unit cost	10.26	4.30
Units	250	250
Total cost   B	0	215	215
Units started and completed
Completion	100%	100%
Per unit cost	10.26	4.30
Units	7750	7750
Total cost    C	79486	33325	112811
Total cost A+B+C	81986	33540	116526
Ending work in progress
Completion	100%	60%
Per unit cost	10.26	4.30
Units	1,500	1,500
Total cost	15384	3870	19254

3.

Weighted average

Cost per unit

Material =2500/250 - 10

COnversin = 1000/250*80% = 5

Completed goods = $15

FIFO Current

Cost per unit = 10.26+4.30 = 14.56

Weighted average

Cost per unit = 10.25 +4.32 = 14.57