Question
In: Accounting
McIlhenny Company McIlhenny Company adds material at the start of production. The following production information is...
McIlhenny Company
McIlhenny Company adds material at the start of production. The
following production information is available for June:
| Beginning Work in Process Inventory | |||
| (35% complete as to conversion) |
10,000 |
units | |
| Started this period |
120,000 |
units | |
| Ending Work in Process Inventory | |||
| (60% complete as to conversion) |
8,000 |
units | |
| Beginning Work in Process Inventory Costs: | |||
| Material |
$32,000 |
||
| Conversion |
74,000 |
||
| Current Period Costs: | |||
| Material |
$ 298,243 |
||
| Conversion |
89,979 |
||
Refer to McIlhenny Company. What is the cost of units completed
using the weighted average?
| a. |
$366,275 |
|
| b. |
$343,980 |
|
| c. |
$467,260 |
|
| d. |
$509,600 |
Solutions
Expert Solution
Correct answer----------(c) $467,260
Working
| Reconciliation of Units | ||
| A | Opening WIP | 10,000 |
| B | Introduced | 120,000 |
| C=A+B | TOTAL | 130,000 |
| D | Transferred | 122,000 |
| E=C-D | Closing WIP | 8,000 |
.
| Statement of Equivalent Units(Weighted average) | |||||||
| Material | Conversion cost | ||||||
| Units | Complete % | Equivalent units | Complete % | Equivalent units | |||
| Transferred | 122,000 | 100% | 122,000.0 | 100% | 122,000 | ||
| Closing WIP | 8,000 | 100% | 8,000.0 | 60% | 4,800 | ||
| Total | 130,000 | Total | 130,000.0 | Total | 126,800 | ||
.
| Cost per Equivalent Units (Weighted average) | ||||
| COST | Material | Conversion cost | TOTAL | |
| Beginning WIP Inventory Cost | $ 32,000 | $ 74,000 | $ 106,000 | |
| Cost incurred during period | $ 298,243 | $ 89,979 | $ 388,222 | |
| Total Cost to be accounted for | $ 330,243 | $ 163,979 | $ 494,222 | |
| Total Equivalent Units | 130,000 | 126,800 | ||
| Cost per Equivalent Units | $ 2.54 | $ 1.29 | ||
.
| Statement of cost (Weighted average) | |||||
| Cost | Equivalent Cost/unit | Ending WIP | Transferred | ||
| Units | Cost Allocated | Units | Cost Allocated | ||
| Material | $ 2.54 | 8,000 | $ 20,320.00 | 122,000 | $ 309,880 |
| Conversion cost | $ 1.29 | 4,800 | $ 6,192.00 | 122,000 | $ 157,380 |
| TOTAL | $ 493,772 | TOTAL | $ 26,512 | TOTAL | $ 467,260 |
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