Question

Jackson Inc. had the following production and cost information for its fabrication department during the month of March (materials are added at the beginning of the fabrication process):

Production:
Units in process, March 1, 50% complete with respect to conversion	5,000
Units completed	32,600
Units in process, March 30, 60% complete	6,000
Costs:
Work in process, March 1:
Materials	$20,000
Conversion costs	15,100
Total	$35,100
Current costs:
Materials	$62,500
Conversion costs	105,000
Total	$167,500

Jackson uses the weighted average method.

Required:

1. Prepare an equivalent units schedule. Enter percentages as whole numbers (i.e. 55 not .55).

2. Calculate the total unit cost. Round all intermediate calculations and final answer to the nearest cent.

3. Calculate the cost of units transferred out and the cost of EWIP. In your computations, round unit costs to the nearest cent and use in subsequent calculations. Round your final answers to the nearest dollar.

Answer 1

• All working forms part of the answer
• Requirement 1: Schedule of Equivalent Units

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
	[A]	[B]	[A x B]	[C]	[A x C]
Transferred	32600	100%	32600	100%	32600
Closing WIP	6000	100%	6000	60%	3600
Total	38600	Total	38,600	Total	36,200

• Requirement 2: Total Equivalent Unit Cost

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$          20,000.00	$      15,100.00	$            35,100.00
Cost incurred during period	$          62,500.00	$   105,000.00	$          167,500.00
Total Cost to be accounted for	$          82,500.00	$   120,100.00	$          202,600.00
Total Equivalent Units	38600	36200
Cost per Equivalent Units	$                2.14	$            3.32	$ 5.46 [2.14 + 3.32]

Total Cost per unit = $ 5.46

• Requirement 3: Cost of Units Transferred and Cost of EWIP

Cost of Units Transferred = 32,600 units x $ 5.46 = $ 177,996

Cost of EWIP:

(6000 units for material x $ 2.14) + (3,600 units for conversion x $ 3.32) = 12840 + 11952 = $ 24,792