Question

In: Accounting

Hi-Test Company uses the weighted-average method of process costing to assign production costs to its products....

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.

Solutions

Expert Solution

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.


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