Question

QUESTION 1 - Please show work for understanding of problem.

New Image Sports uses a WEIGHTED AVERAGE process-costing system. For March, the company had the following activities:

Beginning work-in-process inventory    6,000 units

Units placed in production      24,000 units

Units completed  and Transferred Out   25,000 units

Cost of beginning work in process -Materials    $ 3,000

Cost of beginning work in process- Conversion Costs    $ 2,000        

Direct material costs added in March                                        $18,000

Conversion costs added in March                                             $13,750

Direct materials are placed into production at the beginning of the process. Ending Work in Process is 60% completed as to conversion costs.

1. The Total Equivalent Units would be __________ for Direct Materials and ________ for Conversion Costs.

2. The Cost per Equivalent Unit would be ________ for Direct Materials and _________ for Conversion Costs.  Round Conversion Costs to 4 decimals.

3. The Total Cost of the 25,000 units completed and transferred out is ___________ .

4. The Total Cost of Ending Work In Process is _________ of which ________ is Direct Materials and ________ is Conversion Costs.

Answer 1

1) equivalent units

Particular	material	conversion
Units completed and transferred out	(25000×100%) 25000	(25000×100%) 25000
Ending inventory(note below)	(5000×100%) 5000	(5000×60%) 3000
Equivalent units	30000	280000

Note: ending inventory = beginning inventory+ units placed in production - units completed and transferred out

Ending inventory = 6000+24000 - 25000 = 5000 units

equivalent units of material = 30000 units

equivalent units of conversion = 28000 units

2) cost per Equivalent unit

Particular	material	conversion
(a) cost of beginning inventory	$3000	$2000
(b) cost added during the month	$18000	$13750
(C) total cost (a+b)	$21000	$15750
(d) equivalent units	30000	28000
Cost per Equivalent unit (c/d)	$0.70	$0.5625

Cost per Equivalent unit material = $0.70

Cost per Equivalent unit conversion = $0.5625

3) cost of units completed and transferred out

Material = 25000×$0.70 = $17500

Conversion = 25000×$0.5625 = $14062

total cost of units completed and transferred out = $17500+$14062= $31562

4) ending inventory cost

Material = 5000×$0.70 = $3500

conversion = 3000×$0.5625= $1688

total cost of ending inventory = $3500 +1688= 5188