Question

Tracker Sports is a manufacturer of sportswear. Tracker produces its products in two departments.
The information for the current month for Department #2 is as follows:

Beginning work-in-process	20,000	units
Units transferred in from Dept #1	40,000	units
Units completed	50,000	units
Ending work-in-process	10,000	units
Beginning WIP transferred in costs	$50,000
Beginning WIP direct materials	$12,000
Beginning WIP direct labor	$3,200
Beginning WIP overhead	$1,600
Costs transferred in from Dept #1	$100,000
Direct material added during month	$60,000
Direct manufacturing labor during month	$20,000
Manufacturing overhead applied	???

Beginning WIP was half complete as to conversion costs. Direct materials for Department #2 are added when the process is 25% complete. Factory overhead is applied at a rate equal to 50 percent of direct manufacturing labor. Ending WIP was 60 percent complete. Tracker Sports uses weighted-average costing.

Required:

(HINT: use 4 decimal places in your calculations)

a. Compute the equivalent units of production for each input.
b. Compute the cost per unit.
c. Compute the cost transferred out to finished goods.
d. Compute the ending work-in-process inventory balance

Answer 1

Weighted average cost
Beginning units	20000	Transferred out	50,000
Units received from preceeding	40000	Ending units	10,000
	60000		60000
Equivalent units	Transferred in	Material	Conversion cost
Units transferred                      A	50000	50000	50,000
Ending Units	10,000	10,000	10,000
Completion	100%	100%	60%
B	10000	10000	6000
Total units	60000	60000	56000
Cost per equivalent units
Particulars	Transferred in	Material	Conversion cost
As at beginning	50000	12000	4800	66800
Added during the month	100000	60000	30000	190000
Cost to be accounted for	150000	72000	34800	256800
Total eqivalent units	60000	60000	56000
Cost per equivalent unit	2.50	1.20	0.62	4.32
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

	Cost of ending work in progress
	Particulars	Transferred in	Material	Conversion cost
	Ending units	10,000	10,000	10,000
	Cost per equivalent units	2.50	1.20	0.62
	Completion	100%	100%	60%
	Total cost	25000.00	12000.00	3729
	Total cost	40729
	Cost of goods transferred
	Particulars	Transferred in	Material	Conversion cost
	Number of units	50000	50000	50000
	Cost per equivalent units	2.50	1.20	0.62
	Total amount	125000.00	60000.00	31071
	Total cost	216071