Question

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,600 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $760,050 in total. The ending work in process inventory in January consisted of 3,700 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

	Materials			Labor			Overhead
Cost per equivalent unit	$	14.50		$	4.40		$	7.10

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

1.Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

	Materials Labor Overhead Equivalent units

2.

Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

	Materials Labor Overhead Total Cost of ending work in process inventory

3.  

Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

	Materials Labor Overhead Total Cost of units completed and transferred out

4.

Prepare a cost reconciliation for January.

	Cost Reconciliation Total cost to be accounted for Costs accounted for as follows: Total cost accounted for

Answer 1

1.

Equivalent units = Number of partially completed units x percentage completion

Equivalent units for materials = 3,700 x 0.8 = 2,960
Equivalent units for labor = 3,700 x 0.6 = 2,220
Equivalent units for overhead = 3,700 x 0.6 = 2,220

2.
Equivalent units of production = Units transferred to the next department or to finished goods + Equivalent units in ending work in process inventory

Equivalent units of production for materials = 26,600 + 2,960 = 29,560
Equivalent units of production for labor = 26,600 + 2,220 = 28,820
Equivalent units of production for overhead = 26,600 + 2,220 = 28,820
3.

cost of ending inventory = equivalent units of production x cost per equivalent unit

cost of ending inventory for materials = 2,960 x 14.5 = 42920
cost of ending inventory for labor = 2,220 x 4.40 = 9768
cost of ending inventory for overhead = 2,220 x 7.10 = 15762

Total cost of ending inventory =
42920+9768+15762 = 68450

4.

cost of ending work in process inventory = units transferred to next department x cost per equivalent unit

cost of ending work in process inventory for materials = 26600 x 14.50 = 385700
cost of ending work in process inventory for labor = 26600 x 4.40 = 117040
cost of ending work in process inventory for overhead = 26600x 7.10 = 188860

total cost of ending work in process inventory = 385700 + 117040 + 188860 = 691600

5.

total cost to be accounted for $760050 cost of ending work in process inventory $68450 cost of units completed and transferred out 691600 total cost accounted for $760050
(
total cost to be accounted for = cost of beginning work in process inventory + cost added to production during the period

total cost to be accounted for = 760050it is given

cost accounted for = cost of ending work in process inventory + cost of units transferred out

cost accounted for = 68450+ 691600 = 760050