Question

Arsenio Company manufactures a single product that goes through two processes, mixing and cooking. The following data pertain to the mixing department for August:

Work-in-process inventory, August 1
Conversion: 90% complete		33,000	units
Work-in-process inventory, August 31
Conversion: 50% complete		32,000	units
Units started		67,000
Units completed and transferred out		?
Costs
Work-in-process inventory, August 1
Material X	$	68,100
Material Y		83,300
Conversion		118,660
Costs added during August
Material X		152,200
Material Y		141,100
Conversion		284,540

Material X is added at the beginning of work in the mixing department. Material Y is also added in the mixing department, but not until units are 70% complete with regard to conversion. Conversion costs are incurred uniformly during the process. The company uses the weighted-average cost method.

Required:

1. & 2. Calculate the equivalent units and costs per equivalent unit of material X, material Y, and conversion for the mixing department.

3. Calculate the cost of units transferred out.

4. Calculate the cost of the ending Work-in-Process Inventory.

Answer 1

Solution 1 & 2:

Computation of Equivalent unit of Production - Mixing Department
Particulars	Physical Units	Material X	Material Y	Conversion
Units to account for:
Beginning WIP	33000
Started into Production	67000
Total units to account for	100000
Unit completed & Transferred out	68000	68000	68000	68000
Closing WIP:	32000
Material X (100%)		32000
Material Y (0%)			0
Conversion (50%)				16000
Equivalent units of production	100000	100000	68000	84000

Computation of Cost per equivalent unit of Production - Mixing Department
Particulars	Material X	Material Y	Conversion
Opening WIP	$68,100.00	$83,300.00	$118,660.00
Cost Added during Period	$152,200.00	$141,100.00	$284,540.00
Total cost to be accounted for	$220,300.00	$224,400.00	$403,200.00
Equivalent units of production	100000	68000	84000
Cost per Equivalent unit	$2.203	$3.300	$4.800

Solution 3 & 4:

Computation of Cost of ending WIP and units completed & transferred out - Mixing Department
Particulars	Material X	Material Y	Conversion	Total
Equivalent unit of Ending WIP	32000	0	16000
Cost per equivalent unit	$2.203	$3.300	$4.800
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$70,496	$0	$76,800	$147,296
Units completed and transferred	68000	68000	68000
Units completed and transferred	$149,804	$224,400	$326,400	$700,604