Question

SV Company uses the weighted-average method of inventory costing [Which means that the stage of completion of beginning inventory is not important]

Beginning Work in Process inventory for September:

    Physical units                                                              5,000 units

    % complete for materials                                               70%
    % complete for conversion                                 25%

    Materials cost from August                                         $7,350
    Conversion cost from August                                    $3,125

   Production started and completed in September:

    Physical units                                                             40,000 units

   Ending Work in Process inventory for September:
           Physical units                                                       4,000 units

           % complete for materials                                      40%
          % complete for conversion                                 10%

New manufacturing costs for September:

    Materials                                                                 $96,975
    Conversion                        $79,470

Compute the total cost of all units that were completed and transferred to finished goods during September. Also, compute the total cost of the ending Work in Process inventory.

Answer 1

Solution

Cost of all units that were completed and transferred to finished goods during September=$182,090

Cost of the ending Work in Process inventory= $ 4,830

Reconciliation of Units
A	Opening WIP	5,000
B	Introduced	39,000
C=A+B	TOTAL	44,000
D	Transferred	40,000
E=C-D	Closing WIP	4,000

Statement of Equivalent Units
				Material		Conversion Cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	40,000			100%	40,000	100%	40,000
Closing WIP	4,000			40%	1,600	10%	400
Total	44,000			Total	41,600	Total	40,400

Cost per Equivalent Units
COST		Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost		$               7,350	$     3,125	$               10,475
Cost incurred during period		$             96,975	$   79,470	$            1,76,445
Total Cost to be accounted for		$         1,04,325	$   82,595	$            1,86,920
Total Equivalent Units		41,600	40,400
Cost per Equivalent Units		$                 2.51	$        2.04

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$    2.51	1,600	$     4,013	$       40,000	$   1,00,313
Conversion Cost	$    2.04	400	$         818	$       40,000	$       81,777
		TOTAL	$     4,830	TOTAL	$   1,82,090