Question

The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inventories. The accounting records show the following information for a particular day.

Beginning WIP inventory
Direct materials	$	992
Conversion costs		407
Current period costs
Direct materials		18,540
Conversion costs		10,538

Quantity information is obtained from the manufacturing records and includes the following.

Beginning inventory	900	units	(60% complete as to materials, 55% complete as to conversion)
Current period units started	4,900	units
Ending inventory	1,100	units	(40% complete as to materials, 25% complete as to conversion)

Required:

a. Compute the equivalent units for the materials and conversion cost calculations.

b. Compute the cost per equivalent unit for direct materials and conversion costs.

Answer 1

Answer a

Equivalent units for the materials = 6,240 units

Equivalent units for the conversion cost = 6,075 units

Particulars	Units	% Material	EUP- Material	% Coversion	EUP - Conversion
Started and completed	5,800	100%	5,800	100%	5,800
Ending Inventory	1,100	40%	440	25%	275
Total	6,900		6,240		6,075

Answer 2

Cost per equivalent unit for direct materials = $ 3.13

Cost per equivalent unit for conversion costs = $ 1.80

Particulars	Units	% Material	EUP- Material	% Coversion	EUP - Conversion
Started and completed	5,800	100%	5,800	100%	5,800
Ending Inventory	1,100	40%	440	25%	275
Total	6,900		6,240		6,075
Costs:
Opening		$                                    992	$                                             407
Current period		$                               18,540	$                                        10,538
Total		$                               19,532	$                                        10,945
Cost per unit		$                                   3.13	$                                            1.80

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