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Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments Fordman Company has a product that passes...

Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.

The second department (Polishing) had the following physical flow schedule for December:

Units to account for:
  Units, beginning work in process 4,000 (40% complete)
  Units started   ?
  Total units to account for   ?
Units accounted for:
  Units, ending work in process 8,000 (50% complete)
  Units completed   ?
  Units accounted for   ?

Costs in beginning work in process for the Polishing Department were direct materials, $4,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $33,000; conversion costs, $48,000; and transferred in, $40,000.

Compute the unit cost for the month. If required, round your answer to the nearest cent.

Solutions

Expert Solution

Solution:

Units to account for:
  Units, beginning work in process 4,000 (40% complete)
  Units started 20000
  Total units to account for 24,000
Units accounted for:
  Units, ending work in process 8,000 (50% complete)
  Units completed 16000
  Units accounted for 24,000
Computation of Equivalent unit of Production - Polishing Department
Particulars Physical Units Transferred In cost Material Conversion
Unit completed & Transferred out 16000 16000 16000 16000
Closing WIP: 8000
Transferred In (100%) 8000
Material (50%) 4000
Conversion (50%) 4000
Equivalent units of production 24000 24000
Computation of Cost per equivalent unit of Production - Polishing Department
Particulars Transferred In cost Material Conversion
Opening WIP $8,000.00 $4,000.00 $6,000.00
Cost Added during month $40,000.00 $33,000.00 $48,000.00
Total cost to be accounted for $48,000.00 $37,000.00 $54,000.00
Equivalent units of production 24000 20000 20000
Cost per Equivalent unit $2.00 $1.85 $2.70
0000 20000

Unit cost for the month = $2 + $1.85 + $2.70 = $6.55 per unit

ekkarill92 answered 1 year ago
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