In: Accounting
Weighted Average Method, Unit Costs, Valuing Inventories
Walser Inc. produces a product that passes through two processes. During February, equivalent units were calculated using the weighted average method:
Units completed | 200,000 |
Add: Units in EWIP X Fraction complete: | |
(57,930 X 30%) | 17,379 |
Equivalent units of output (weighted average) | 217,379 |
Less: Units in BWIP X Fraction complete: | |
(20,000 X 80%) | 16,000 |
Equivalent units of output (FIFO) | 201,379 |
The costs that Walser had to account for during the month of February were as follows:
Beginning work in process | $109,000 |
Costs added | 1,301,790 |
Total | $1,410,790 |
1. Using the weighted average method, determine unit cost. If required, round your answer to the nearest cent and use rounded amount in subsequent requirements.
2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory? If required, round your answers to the nearest dollar.
Cost of units transferred out: $
Cost of ending inventory: $
1) | |||||||||||
Unit cost | $ 6.49 | ||||||||||
Working: | |||||||||||
As per Weighted Average Method: | |||||||||||
Unit Cost | = | Total Cost/Total Equivalent units of output | |||||||||
= | $ 14,10,790 | / | 2,17,379 | ||||||||
= | $ 6.49 | ||||||||||
2) | |||||||||||
Cost of units transferred out | $ 12,98,000 | ||||||||||
Cost of ending inventory | $ 1,12,790 | ||||||||||
Working: | |||||||||||
Cost of units transferred out | = | Units transferred out x Unit Cost | |||||||||
= | 2,00,000 | x | $ 6.49 | ||||||||
= | $ 12,98,000 | ||||||||||
Cost of ending inventory | = | Equivalent ending units x Cost per equivalent unit | |||||||||
= | 17379 | x | $ 6.49 | ||||||||
= | $ 1,12,790 | ||||||||||