Question

McElroy, Inc., produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow:

Direct materials	$	140,400
Conversion costs		117,500
	$	257,900

The assembly department has no beginning Work-in-Process Inventory. During the month, it started 26,000 cell phones, but only 21,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 5,000 cell phones, but only 50% of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.

Required:

1. Compute the equivalent units and costs per equivalent unit for March in the assembly department.

2. Compute the cost of units completed and transferred to the testing department.

3. Compute the cost of the ending Work-in-Process.

Answer 1

• All working forms part of the answer
• Requirement 1

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	21,000	100%	21,000	100%	21,000
Units of ENDING WIP	5,000	100%	5,000	50%	2,500
Equivalent Units of Production			26,000		23,500

COST per EUP			Material		Conversion
Cost of Beginning WIP			$                       -		$                                                 -
Cost incurred during the period			$      140,400.00		$                                117,500.00
Total Costs		Costs	$      140,400.00	Costs	$                                117,500.00
Equivalent units of production		EUP	26,000	EUP	23,500
Cost per EUP			$            5.40		$                                      5.00

• Requirement 2

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	21,000	$               5.40	$      113,400.00
- Conversion	21,000	$               5.00	$      105,000.00
Total Cost transferred Out				$            218,400.00

--Answer = $218,400

• Requirement 3

Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	5,000	$               5.40	$        27,000.00
- Conversion	2,500	$               5.00	$        12,500.00
Total cost of ending WIP				$              39,500.00

Answer = $ 39,500