Question

The following partially completed process cost summary describes the July production activities of Ashad Company. Its production output is sent to its warehouse for shipping. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion. Equivalent Units of Production Direct Materials Conversion Units transferred out 34,500 EUP 34,500 EUP Units of ending work in process 2,000 EUP 1,200 EUP Equivalent units of production 36,500 EUP 35,700 EUP Costs per EUP Direct Materials Conversion Costs of beginning work in process $ 12,850 $ 1,680 Costs incurred this period 385,000 198,240 Total costs $ 397,850 $ 199,920 Units in beginning work in process (all completed during July) 1,500 Units started this period 35,000 Units completed and transferred out 34,500 Units in ending work in process 2,000 Exercise 3-12 Weighted average: Completing a process cost summary LO C3 Prepare its process cost summary using the weighted-average method. (Round "Cost per EUP" to 2 decimal places.)

Answer 1

Solution:

Computation of Equivalent unit of Production - Weighted Average - Ashad Company
Flow of Production	Flow of physical units	Material	Conversion
Units Accounted for:
Unit completed & Transferred out	34500	34500	34500
Ending WIP:	2000
Material (100%)		2000
Conversion (60%)			1200
Equivalent units of production	36500	36500	35700

Computation of Cost per equivalent unit of Production - Weighted Average - Ashad Company
Particulars	Material	Conversion
Opening WIP	$12,850.00	$1,680.00
Cost Added during period	$385,000.00	$198,240.00
Total cost to be accounted for	$397,850.00	$199,920.00
Equivalent units of production	36500	35700
Cost per Equivalent unit	$10.90	$5.60

Computation of Cost of ending WIP and units completed & transferred out - Ashad Company
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	2000	1200
Cost per equivalent unit	$10.90	$5.60
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$21,800	$6,720	$28,520
Units completed and transferred	34500	34500
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$376,050	$193,200	$569,250

Cost Reconciliation - Weighted Average - Ashad Company
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$14,530.00
Cost added to production	$583,240.00
Total Cost to be accounted for	$597,770.00
Costs accounted for as follows:
Cost of unit transferred out	$569,250
Ending WIP	$28,520
Total cost accounted for	$597,770