Question

Problem 4-14 Analysis of Work in Process T-account-Weighted-Average Method [LO4-1, LO4-2, LO4-3, LO4-4]

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given below:

Work in Process—Grinding Department
Inventory, May 1	220,220	Completed and transferred to the Mixing Department	?
Materials	525,610
Conversion	327,830
Inventory, May 31	?

The May 1 work in process inventory consisted of 121,000 pounds with $131,890 in materials cost and $88,330 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 30% complete with respect to conversion. During May, 405,000 pounds were started into production. The May 31 inventory consisted of 91,000 pounds that were 100% complete with respect to materials and 60% complete with respect to conversion. The company uses the weighted-average method in its process costing system.

Required:

1. Compute the Grinding Department's equivalent units of production for materials and conversion in May.

2. Compute the Grinding Department's costs per equivalent unit for materials and conversion for May.

3. Compute the Grinding Department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the Grinding Department's cost of units transferred out to the Mixing Department for materials, conversion, and in total for May.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	526,000	489,600

.

	Material	Conversion
Cost per equivalent Unit	$                                1.25	$                   0.85

.

	Material	Conversion
Ending Inventory	$ 113,750	$ 46,410	$ 160,160

.

	Material	Conversion
Units Completed and transferred	$ 543,750	$ 369,750	$ 913,500

Working

Reconciliation of Units
A	Beginning WIP	121,000
B	Introduced	405,000
C=A+B	TOTAL	526,000
D	Transferred out	435,000
E=C-D	Ending WIP	91,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	435,000			100%	435,000	100%	435,000
Ending WIP	91,000			100%	91,000	60%	54,600
Total	526,000			Total	526,000	Total	489,600

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 131,890	$ 88,330	$ 220,220
Cost incurred during period (B)		$ 525,610	$ 327,830	$ 853,440
Total Cost to be accounted for (C=A+B)		$ 657,500	$ 416,160	$ 1,073,660
Total Equivalent Units(D)		526,000	489,600
Cost per Equivalent Units (E=C/D)		$                   1.25	$                     0.85	$                        2.10

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.25	91,000	$        113,750.00	435,000	$        543,750.00
Conversion	$ 0.85	54,600	$          46,410.00	435,000	$        369,750.00
TOTAL	$ 1,073,660	TOTAL	$ 160,160	TOTAL	$ 913,500