Question

The Penphen Corporation was recently formed to produce a semiconductor chip that forms an essential part of the personal computer manufactured by a major corporation. The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process. June is Penphen’s first month of operations, and therefore, there was no beginning inventory. Direct materials cost for the month totaled $902,500, while conversion costs equaled $5,400,000. Accounting records indicate that 475,000 chips were started in June and 425,000 chips were completed. The Company uses the weighted average method for costing.

Ending inventory was 50% complete as to conversion costs.

1. Using the 5 steps in process costing and the format and terminology in the textbook, calculate the physical units, equivalent units, total costs, cost per equivalent unit, and assign costs to completed and work in process units. Show all calculations.

Answer 1