Question

McElroy, Inc., produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow:

Direct materials	$	148,800
Conversion costs		114,400
	$	263,200

The assembly department has no beginning Work-in-Process Inventory. During the month, it started 24,000 cell phones, but only 20,000 were fully completed and transferred to the testing department. All parts had been made and placed in the remaining 4,000 cell phones, but only 50% of the conversion had been completed. The company uses the weighted-average method of process costing to accumulate product costs.

Required:

1. Compute the equivalent units and costs per equivalent unit for March in the assembly department.

2. Compute the cost of units completed and transferred to the testing department.

3. Compute the cost of the ending Work-in-Process.

Answer 1

Solution:

1	Total equivalent units	24,000	22,000
	Cost per equivalent Units	$         6.20	$       5.20
2	Total costs of Units Completed	$ 228,000
3	Total cost of ending work in process	$    35,200

Working:

	Physical units	%	DM		CC
Units completed	20,000	100%	20,000	100%	20,000
Ending Work in process	4,000	100%	4000	50%	2000
Total equivalent units			24,000		22,000
Beginning WIP cost			$ 0		$ 0
Add: Cost added during the month			$        148,800		$        114,400
Total cost			$        148,800		$        114,400
÷ total equivalent units			24,000		22,000
= Cost per equivalent unit			$               6.20		$               5.20
Cost of units transferred out:	EUP[a]	Cost per EUP[b]	Total cost[a*b]
Direct materials	20,000	$       6.20	$        124,000
Conversion	20,000	$       5.20	$        104,000
Total costs of Units Completed			$        228,000
Costs of ending work in process
Direct materials	4,000	$       6.20	$          24,800
Conversion	2,000	$       5.20	$          10,400
Total cost of ending work in process			$          35,200