Question

Exercise 4-8 Equivalent Units; Cost per Equivalent Unit; Assigning Costs to Units-Weighted-Average Method [LO4-2, LO4-3, LO4-4]

Helix Corporation uses the weighted-average method in its process costing system. It produces prefabricated flooring in a series of steps carried out in production departments. All of the material that is used in the first production department is added at the beginning of processing in that department. Data for May for the first production department follow:

		Percent Complete
	Units	Materials			Conversion
Work in process inventory, May 1	74,000	100	%		30	%
Work in process inventory, May 31	54,000	100	%		20	%
Materials cost in work in process inventory, May 1				$	58,800
Conversion cost in work in process inventory, May 1				$	17,500
Units started into production					262,400
Units transferred to the next production department					282,400
Materials cost added during May				$	143,040
Conversion cost added during May				$	252,244

Required:

1. Calculate the first production department's equivalent units of production for materials and conversion for May.

2. Compute the first production department's cost per equivalent unit for materials and conversion for May.

3. Compute the first production department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the first production department's cost of the units transferred to the next production department for materials, conversion, and in total for May.

Answer 1

1. Calculate the first production department's equivalent units of production for materials and conversion for May

	Physical unit	%	EUP-material	%	EUP-conversion cost
Units transferred out	282400	100%	282400	100%	282400
Ending work in process	54000	100%	54000	20%	10800
Total	336400		336400		293200

2. Compute the first production department's cost per equivalent unit for materials and conversion for May.

	Material	Conversion cost
Beginning wip	58800	17500
Cost added during period	143040	252244
Total cost	201840	269744
Equivalent unit	336400	293200
Cost per equivalent unit	0.60	0.92

3. Compute the first production department's cost of ending work in process inventory for materials, conversion, and in total for May.

	Material	conversion cost	Total
Cost of ending work in process	54000*.60=32400	54000*20%*.92=9936	42336

4. Compute the first production department's cost of the units transferred to the next production department for materials, conversion, and in total for May.

	Material	conversion cost	Total
Cost of units transferred	282400*.60=169440	282400*.92=259808	429248