Question

Hi-Test Company uses the weighted-average method of process costing to assign production costs to its products. Information for the company's first production process September follows. Assume that all materials are added at the beginning of this production process, and that conversion costs are added uniformly throughout the process. Work in process inventory, September 1 (6,000 units, 100% complete with respect to direct materials, 80% complete with respect to direct labor and overhead; consists of $60,000 of direct materials cost, $78,460 conversion cost $ 138,460 Costs incurred in September Direct materials $ 415,000 Conversion $ 358,000 Work in process inventory, September 30 (11,000 units, 100% complete with respect to direct materials, 40% complete with respect to conversion) ? Units started in September 32,000 Units completed and transferred to finished goods inventory 27,000

Required: Compute each of the following using the weighted-average method of process costing.

1. & 2. The number of equivalent units for materials and conversion for the month.

3. & 4. The cost per equivalent unit of materials and conversion for the month.

5. The total cost of goods transferred out.

6. The total cost of ending work in process inventory.

Answer 1

Answers

1. equivalent units for materials and conversion = 38,000

2. equivalent units for conversion = 31,400

3. cost per equivalent unit of materials = $ 12.50

4. cost per equivalent unit of conversion = $ 13.90

5. total cost of goods transferred out = $ 712,800

6. total cost of ending work in process = $ 198,660

Calculations:

Statement of Equivalent Production
Input	Particulars	Output	Material	Conversion cost
			%	Units	%	Units
38,000	Started and completed	27,000	100%	27,000	100%	27,000
	Ending Inventory	11,000	100%	11,000	40%	4,400
38,000	Total	38,000		38,000		31,400
	Costs:
	Opening		$          60,000	$          78,460
	Current period		$        415,000	$        358,000
	Total		$        475,000	$        436,460
	Cost per unit		$            12.50	$            13.90

Value of Started and completed
Material (27000*12.5)	$ 337,500.00
Conversion cost (27000*13.90)	$ 375,300.00
Total	$ 712,800.00

Value of Ending Inventory
Material (11000*12.5)	$ 137,500.00
Conversion cost (4400*13.90)	$   61,160.00
Total	$ 198,660.00

In case of any doubt, please comment.