Question

1. Ingrim Corporation uses Weighted Average in its process costing system. The following data concern the company’s Processing Department for the month of May:

		Percentage of Completion
	Units	Direct Materials	Conversion Costs
Work-in-process beg, May 1st	5,000	30%	65%
Units Completed and Transferred out	9,000
Work-in-process end, May 30th	6,000	50%	10%

Costs in the WIP, May 1st	Amount
Materials Cost	$5,300
Conversion Cost	$10,200
Total Cost	$15,500
Costs added during May 30th
Materials Cost	$250,000
Conversion Cost	$430,000
Total Cost	$680,000

Required:
a. Determine the equivalent units of production for materials and conversion
b. Determine the cost per equivalent unit for materials and conversion costs (consider two decimals ) .
c. Determine the total cost of completed & transferred out units and total cost of work in process ending .

Answer 1

a) Calculation of equivalent units of production of Materials and Conversion:

		Material	Conversion
	Units Completed and Transferred Out	9000	9000
Add:	Equivalent unit at the end
	6000*50%	2500
	6000*10%		600
Less:	Equivalent unit at the Begining
	5000*30%	1500
	5000*65%		3250
	Equivalent units Produced during the year	10000	6350

Explaiation: Equivalent units in the begining will be subtracted because they were completed during the year and will be included in the figure of 9000. However, some of the work on which was done in last year which will be subtracted to calculate the equivalents unit of Production.

b) Cost per Equivalet units for material and conversion cost :

	Material	Conversion
Particulars	Cost	Equivalent Unit	Eq Cost / unit	Cost	Equivalent Unit	Eq Cost / unit
Cost added during May	250000	9000	27.78	430000	9000	47.78
Opening Cost	5300	1500	3.53	10200	3250	3.14
Weughted Average Cost Per unit		31.31			50.92

c) Calculation of Total cost of completion and tranfer out:

Particulars	Material	Conversion	Total Cost
Cost added during May	250000	430000	680000
Opening Cost	5300	10200	15500
Cost of Closing Inventory not sold (Note 1)	78277.78	30549.74	108827.5
Total Cost of units Completed and transferred out	177022.22	409650.3	586672.5

Calculation of Closing Work in progress:

	Material	Conversion	Total Cost
Particulars	Cost	Equivalent Unit	Eq Cost / unit	Cost	Equivalent Unit	Eq Cost / unit
Weighted Average Cost Per unit		31.31			50.92
Closing units			2500.00			600.00
Cost of Closing units			78277.78			30549.74	108827.52