Question

Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.

The second department (Polishing) had the following physical flow schedule for December:

Units to account for:
Units, beginning work in process	4,000	(40% complete)
Units started	?
Total units to account for	?
Units accounted for:
Units, ending work in process	8,000	(50% complete)
Units completed	?
Units accounted for	?

Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $7,000; and transferred in, $9,000. Costs added during the month: direct materials, $32,000; conversion costs, $47,000; and transferred in, $39,000.

Required:

1. Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.

Fordman Company
Schedule of Equivalent Units
For the month of December

	Direct Materials	Conversion Costs	Transferred In
Units completed
Ending WIP:
x %
x %
Total equivalent units

2. Compute the unit cost for the month. If required, round your answer to the nearest cent.
$ per equivalent unit

Answer 1

Statement Showing Physical Unit
Beginning WIP inventory	4000
Add: Units started during May	20000
Less: Ending inventory	8000
Units completed and transferred	16000

1. Statement showing Computation of Equivalent Unit- Weighted Average
Particular	Whole units	Materials	Conversion	Transferred In
Beginning WIP inventory	4000	4000	4000	4000
Started & completed (16000-4000)	12000	12000	12000	12000
Ending inventory (8000*50%)	8000	4000	4000	8000
Units accounted for	24000	20000	20000	24000
Equivalent Unit of Production
	Materials	Conversion	Transferred In
Equivalent units of production	20000	20000	24000

2. Statement showing Cost per Equivalent Unit
Particular	Total	Material	Conversion	Transferred In
Beginning WIP inventory	$21,000.00	$5,000.00	$7,000.00	9000
Current costs incurred	$118,000.00	$32,000.00	$47,000.00	39000
Total cost to account for (a)	$139,000.00	$37,000.00	$54,000.00	48000
Equivalent units (b)		20000	20000	24000
Cost per Equivalent unit  (a/b)		$1.85	$2.70	$2.00