Question

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,600 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $690,168 in total. The ending work in process inventory in January consisted of 2,400 units, which were 70% complete with respect to materials and 50% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

	Materials			Labor			Overhead
Cost per equivalent unit	$	14.10		$	3.90		$	7.50

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Answer 1

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

	Material	Labor	Overhead
Equivalent unit of ending work in process	2400*70% = 1680	2400*50% = 1200	2400*50% = 1200

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

	Material	Labour	Overhead	Total
Cost of ending work in process	1680*14.10 = 23688	1200*3.9 = 4680	1200*7.50 = 9000	37368

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

	Material	Labour	Overhead	Total
Cost of unit transferred out	25600*14.10 = 360960	25600*3.9 = 99840	25600*7.5 = 192000	652800

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Total cost to be accounted for	690168
Cost accounted as
Cost of units transferred out	652800
Cost of ending work in process	37368
Total Cost accounted as	690168