Question

a)

At the beginning of the month, the Painting Department of Skye Manufacturing had 35,000 units in inventory, 70% complete as to materials, and 20% complete as to conversion. During the month the department started 130,000 units and transferred 142,500 units to the next manufacturing department. At the end of the month, the department had 22,500 units in inventory, 30% complete as to materials and 10% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Painting Department.

124,750 materials; 137,750 conversion.

149,250 materials; 144,750 conversion.

144,750 materials; 149,250 conversion.

124,750 materials; 144,750 conversion.

149,250 materials; 137,750 conversion.

b)

Williams Company computed its cost per equivalent unit for direct materials to be $2.70 and its cost per equivalent unit for conversion to be $3.84. A total of 249,000 units of product were completed and transferred out as finished goods during the month, and 35,000 of equivalent units remained unfinished at the end of the month. The amount that should be reported in Finished Goods Inventory is:

Multiple Choice

$672,300.

$228,900.

$134,400.

$1,722,960.

$1,628,460.

c)

During January, the production department of a process operations system completed and transferred to finished goods a total of 77,000 units. At the end of January, 15,000 additional units were in process in the production department and were 40% complete with respect to labor. The beginning inventory included labor cost of $39,700 and the production department incurred direct labor cost of $315,100 during January. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.

Multiple Choice

$3.80.

$3.86.

$4.61.

$4.27.

$4.09.

Answer 1

• All working forms part of the answer
• Question ‘a’

Correct answer is Option #2: 149,250 materials, 144,750 conversion = Equivalent Units of production.

Working for above answer:

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	142500	100%	142500	100%	142500
Closing WIP	22500	30%	6750	10%	2250
Total	165000	Total	149,250 units	Total	144,750 units

• Question ‘b’

Finished goods transferred = 249,000 units.

Total Equivalent cost per unit = $ 2.70 + $ 3.84 = $ 6.54

Finished Goods to be reported = 249,000 units x $ 6.54 = $1,628,460 = Option #5

• Question ‘c’

Working:

Cost per Equivalent Units
COST	Labor Cost
Beginning WIP Inventory Cost	$        39,700.00
Cost incurred during period	$   315,100.00
Total Cost to be accounted for (A)	$   354,800.00
Total Equivalent Units (B)	83,000 [ 77,000 + (15,000 x 40%)]
Cost per Equivalent Units (A/B) = Answer	$ 4.27 per unit [ 354800 / 83000]

Hence, The correct answer is Option #4: $ 4.27