Question

1. A company manufactures a product that passes through two processes. A quantity schedule for a recent month for the first process is as follows:

Work in process, beginning (60% materials, 75% conversion costs added last month)        20,000

Units stated into production                                                                                                                       180,000

Units transferred to the next process                                                                                                      190,000

Work in Process, ending (100% material, 60% conversion costs added this month)             10,000

Costs in the beginning work in process of the first processing department were materials $4,000 and conversion cost $14,200.

Costs added during the month were materials $56,000 and conversion costs $360,360.

Required: Using the weighted average cost method determine the equivalent units for the month for material and conversion. Compute the costs per equivalent unit for the month for the first process.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	200,000	196,000

.

	Material	Conversion	Total
Cost per equivalent Unit	$                    0.30	$                   1.91	$ 2.21

Working

Reconciliation of Units
A	Beginning WIP	20,000
B	Introduced	180,000
C=A+B	TOTAL	200,000
D	Transferred out	190,000
E=C-D	Ending WIP	10,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	190,000			100%	190,000	100%	190,000
Ending WIP	10,000			100%	10,000	60%	6,000
Total	200,000			Total	200,000	Total	196,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 4,000	$ 14,200	$ 18,200
Cost incurred during period		$ 56,000	$ 360,360	$ 416,360
Total Cost to be accounted for		$ 60,000	$ 374,560	$ 434,560
Total Equivalent Units		200,000	196,000
Cost per Equivalent Units		$                   0.30	$                     1.91	$                2.21