Problem 20-2A Weighted average: Cost per equivalent unit; costs assigned to products LO C2, C3 [The...

Problem 20-2A Weighted average: Cost per equivalent unit; costs assigned to products LO C2, C3

[The following information applies to the questions displayed below.]

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 730,000 units of product to finished goods. At the end of November, the work in process inventory consists of 183,000 units that are 60% complete with respect to conversion. Beginning inventory had $356,070 of direct materials and $83,980 of conversion cost. The direct material cost added in November is $2,382,930, and the conversion cost added is $1,595,620. Beginning work in process consisted of 70,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 70,000 were from beginning work in process and 660,000 units were started and completed during the period.

Problem 20-2A Part 1

Required:
1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)

Solutions

Expert Solution

1. Determine the equivalent units of production with respect to direct materials and conversion.

	Physical Unit	%	EUP-Material	%	EUP-Conversion
Unit completed and transferred out	730000	100%	730000	100%	730000
Ending work in process	183000	100%	183000	60%	109800
Equivalent unit of production	913000		913000		839800

2. Compute both the direct material cost and the conversion cost per equivalent unit.

	Material	Conversion
Beginning work in process	356070	83980
Cost added	2382930	1595620
Total Cost	2739000	1679600
Equivalent unit	913000	839800
Cost per equivalent unit	3	2

3) Cost unit transferred out

	Material	Conversion	total cost
Cost of unit transferred out	730000*3 = 2190000	730000*2 = 1460000	3650000

Cost of ending work in process

	Material	Conversion	Total
Cost of ending work in process	183000*3 = 549000	109800*2 = 219600	768600

ekkarill92 answered 1 year ago

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