Question

Cornerstone Exercise 6.10 (Algorithmic) Cost Information and the Weighted Average Method Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below. Direct Materials Conversion Costs Units completed 41,000 41,000 Add: Units in ending work in process × Percentage complete: 14,000 × 100% direct materials 14,000 — 14,000 × 45% conversion materials — 6,300 Eqivalent units of output 55,000 47,300 Costs: Work in process, December 1: Direct materials $68,000 Conversion costs 14,000 Total work in process $82,000 Current costs: Direct materials $550,000 Conversion costs 180,000 Total current costs $730,000 Required: 1. Calculate the unit cost for December, using the weighted average method. Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per equivalent unit 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. Cost of goods transferred out: Units completed $ Cost of EWIP Total costs assigned (accounted for) $ Reconciliation Cost to account for: BWIP $ Current (December) Total $ 3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $4.86 ($68,000/14,000), and the December unit materials cost is $13.41 ($550,000/41,000). The equivalent units in BWIP are 14,000, and the FIFO equivalent units are 41,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Do NOT round interim calculations and, if required, round your answer to the nearest cent. $ per unit

Answer 1

Solution 1:
Computation of Cost per equivalent unit of Production - Weighted Average
Particulars	Material	Conversion
Opening WIP	68000	14000
Cost Added during December	550000	180000
Total cost to be accounted for	618000	194000
Equivalent units of production	55000	47300
Cost per Equivalent unit	11.23636364	4.101479915
	11.24	4.1
Solution 2:
Computation of Cost of ending WIP and units completed & transferred out - Weighted Average
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	14000	6300
Cost per equivalent unit	11.24	4.1
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	157360	25830	183190
Units completed and transferred	41000	41000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	460840	168100	628940
Cost reconciliation - Weighted Average
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	82000
Cost added to production	730000
Total Cost to be accounted for	812000
Costs accounted for as follows:
Cost of unit transferred out	628940
Ending WIP:
Material	157360
Converison	25830
Total cost accounted for	812130
Solution 3:
Weighted average unit material cost = $4.86 * 14000 / 55000 + $13.41 * 41000 / 55000 = $11.23 per unit

Formula :

Solution 1:
Computation of Cost per equivalent unit of Production - Weighted Average
Particulars	Material	Conversion
Opening WIP	68000	14000
Cost Added during December	550000	180000
Total cost to be accounted for	=B5+B6	=C5+C6
Equivalent units of production	55000	47300
Cost per Equivalent unit	=B8/B9	=C8/C9
	11.24	4.1
Solution 2:
Computation of Cost of ending WIP and units completed & transferred out - Weighted Average
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	14000	6300
Cost per equivalent unit	11.24	4.1
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	=B16*B17	=C16*C17	=B18+C18
Units completed and transferred	41000	41000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	=B17*B19	=C17*C19	=B20+C20
Cost reconciliation - Weighted Average
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	82000
Cost added to production	730000
Total Cost to be accounted for	=B25+B27
Costs accounted for as follows:
Cost of unit transferred out	=D20
Ending WIP:
Material	=B18
Converison	=C18
Total cost accounted for	=B32+B34+B35