Question

Weighted-average method, assigning costs. Bio Doc Corporation is a biotech company based in Milpitas. It makes a cancer-treatment drug in a single processing department. Direct materials are added at the start of the process. Conversion costs are added evenly during the process. Bio Doc uses the weighted- average method of process costing. The following information for July 2008 is available.

 

1. Calculate cost per equivalent unit for direct materials and conversion costs.

2. Summarize total costs to account for, and assign total costs to units completed (and transferred out) and to units in ending work inprocess.

Answer 1

Weighted-average method, assigning costs.

1. & 2.

Solution Exhibit 17-24A shows equivalent units of work done to date for Bio Doc Corporation for direct materials and conversion costs.

Solution Exhibit 17-24B summarizes total costs to account for, calculates the cost per equivalent unit of work done to date for direct materials and conversion costs, and assigns these costs to units completed and transferred out and to units in ending work-in-process inventory.

 

SOLUTION EXHIBIT 17-24A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units;

Weighted-Average Method of Process Costing, Bio Doc Corporation for July 2008.

*Degree of completion: direct materials, 100%; conversion costs, 50%.

 

SOLUTION EXHIBIT 17-24B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

 

Weighted-Average Method of Process Costing, Bio Doc Corporation for July 2008.

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;