Question

Cornerstone Exercise 6.10 (Algorithmic)
Cost Information and the Weighted Average Method

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

	Direct Materials				Conversion Costs
Units completed		43,000				43,000
Add: Units in ending work in process ×
Percentage complete:
15,000 × 100% direct materials		15,000				—
15,000 × 45% conversion materials		—				6,750
Eqivalent units of output		58,000				49,750
Costs:
Work in process, December 1:
Direct materials						$65,000
Conversion costs						12,000
Total work in process						$77,000
Current costs:
Direct materials						$580,000
Conversion costs						182,000
Total current costs						$762,000

Required:

1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per equivalent unit

2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for.

Cost of goods transferred out:

Units completed	$
Cost of EWIP
Total costs assigned (accounted for)	$

Reconciliation
Cost to account for:

BWIP	$
Current (December)
Total	$

3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $4.33 ($65,000/15,000), and the December unit materials cost is $13.49 ($580,000/43,000). The equivalent units in BWIP are 15,000, and the FIFO equivalent units are 43,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent.
$ per unit

Answer 1

Solution 1:

Computation of Cost per equivalent unit of Production - Weighted Average
Particulars	Material	Conversion
Opening WIP	$65,000.00	$12,000.00
Cost Added during December	$580,000.00	$182,000.00
Total cost to be accounted for	$645,000.00	$194,000.00
Equivalent units of production	58000	49750
Cost per Equivalent unit	$11.12	$3.90

Solution 2:

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	15000	6750
Cost per equivalent unit	$11.12	$3.90
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$166,810	$26,322	$193,132
Units completed and transferred	43000	43000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$478,190	$167,678	$645,868

Cost reconciliation - Weighted Average
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$77,000.00
Cost added to production	$762,000.00
Total Cost to be accounted for	$839,000.00
Costs accounted for as follows:
Cost of unit transferred out	$645,868
Ending WIP:
Material	$166,810
Converison	$26,322
Total cost accounted for	$839,000

Solution 3:

Weighted average unit material cost = $4.33 * 15000 / 58000 + $13.49 * 43000 / 58000 = $11.12 per unit