Question

On June 1, Vernon Company had a beginning work-in-process inventory of

20,000 units 100% complete as to materials and 60% as to Direct Labour [DL], and Manufacturing Overhead[MOH].

These units contained $60,000 of direct materials and $50,000 of direct labour cost and an appropriate amount of overhead applied.

Manufacturing Overhead [MOH], is applied at the rate of 75% of direct labour cost.

            Vernon uses a weighted-average process-costing system. All raw material is added at the start of the manufacturing process; conversion cost is incurred evenly throughout production – for the purpose of this exercise, you must add Manufacturing Overhead [MOH] and Direct Labour to determine Conversion costs.

             At the end of the current cycle, the company shipped out  55,000 units.

                                    

            The following data relate to activity during June:

            

Ending work in process,  (100% of the         material and 40% complete as to conversion)	15,000  units
Direct materials used ($)                 $135,000
Direct Labour                                 $200,000

            

            

            Required:

                                                  

B. Use the  template provided to determine the following:

    1.  The number of units put into production during the period

    2.  The total equivalent units for direct material and conversion cost.

    3.  The cost per equivalent unit of direct material and conversion cost.

    4.   Reconcile the cost of the ending inventory and the goods transferred

          with the total costs

Clearly label each item

[20 marks/25 minutes]

Answer 1

Vernon
Weighted Average
Answer 1	Whole Units
Ending work in process inventory	15,000.00
Add: Units completed in the month	55,000.00
Less: Beginning work in process inventory	20,000.00
Units put into production during the period	50,000.00
Answer 2	Whole Units	% Materials	EUP- Materials	% Conversion	EUP- Conversion
Units completed in the month	55,000.00	100%	55,000.00	100%	55,000.00
Units ending in WIP Inventory	15,000.00	100%	15,000.00	40%	6,000.00
Equivalent Units of production	70,000.00		70,000.00		61,000.00
Answer 3	EUP- Materials	EUP- Conversion	Total
Cost of ending work in process	60,000.00	87,500.00
Costs added during the period	135,000.00	350,000.00
Total cost	195,000.00	437,500.00	632,500.00
Equivalent Units of production	70,000.00	61,000.00
Cost per Equivalent Unit of production	2.79	7.17	9.96
Reconciliation	EUP	Cost per EUP	Total Cost
Direct Materials	15,000.00	2.79	41,786.00
Conversion	6,000.00	7.17	43,033.00
Total costs of ending work in process			84,819.00
	EUP	Cost per EUP	Total Cost
Direct Materials	55,000.00	2.79	153,214.00
Conversion	55,000.00	7.17	394,467.00
Total costs transferred out			547,681.00
Total costs assigned			632,500.00