Question

In: Accounting

The High Tide Company manufactures gadgets in a single process and uses the weighted average method...

The High Tide Company manufactures gadgets in a single process and uses the weighted average method of process costing. The following information is available:

Work in process inventory, Jan 1.                                            0 units

Units started in production    2,100 units

Units completed and transferred out 1,500 units

Work in process inventory, Dec. 31                                     600 units

Production costs:

   Direct materials $2,871

     Direct labor 2,498

   Manufacturing overhead    5,767

The units still in process are:

80% complete with respect to direct materials

40% complete with respect to conversion costs.

What is the cost per equivalent unit for direct materials?  

a.

1.37

b.

1.45

c.

1.91

d.

.69

Solutions

Expert Solution

Correct answer-----------(b) $1.45

Working

Reconciliation of Units
A Beginning WIP                            -  
B Introduced                     2,100
C=A+B TOTAL                     2,100
D Transferred out                     1,500
E=C-D Ending WIP                         600

.

Statement of Equivalent Units(Weighted average)
Material Conversion
Units Complete % Equivalent units Complete % Equivalent units
Transferred out                                  1,500 100%                       1,500 100%                     1,500
Ending WIP                                      600 80%                          480 40%                         240
Total                                  2,100 Total                       1,980 Total                     1,740

.

Cost per Equivalent Units (Weighted average)
COST Material Conversion TOTAL
Beginning WIP Inventory Cost (A) $ 0
Cost incurred during period (B) $ 2,871 $ 11,265 $ 14,136
Total Cost to be accounted for (C=A+B) $ 2,871 $ 11,265 $ 14,136
Total Equivalent Units(D)                     1,980                       1,740
Cost per Equivalent Units (E=C/D) $                   1.45 $                     6.47 $                        7.92

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