Question

Vaughan Company uses a process costing system to account for unit costs. The following information is available for May:

		DM%	CC%
Beginning WIP Inventory	5,000 units (cost DM = $48,100, CC = $19,800)	70%	50%
Units started in May	40,000 units
Ending WIP	16,000 units	50%	25%

Direct materials added during May were $96,200 and direct labor used in May was $42,900. Vaughan Company applies FOH based on 150% of DL$. Vaughan Company uses the weighted average method of accounting for equivalent units of production.

1. The number of units transferred to the next department in May are a.40,000 units, b.29,000, c.some amount other than those shown, d.45,000

2. The equivalent units of production for direct materials in May are: a.53,000 units, b.37,000, c. 29,000, d.some amount other than those shown

3. The cost per unit of direct materials coming out of this department in May is a.2.60 per unit, b.3.90 per unit, c.4.00 per unit, d.3.50 per unit

4. The total amount of dollars transferred from this department to the next department during May is 5. The dollar amount of ending WIP in the department at the end of May is a.224,750, b.205,900, c.169,650, d.113,100 e. some amount other than those shown

Answer 1

1)	Beginning WIP			5000
	Units Started			40000
	Less: Units in Ending WIP			16000
	Units transferred			29000

2)	37000
3)	$              3.90
4)	$ 2,24,750.00
5)	$    46,600.00

Workings:

Equivalent Units of Production (EUP) - Weighted Average Method
				Units	% Mat.	EUP- Mat.	% Conv.	EUP- Conv.
Units completed and transferred out				29000	100%	29000	100%	29000
Units in ending inventory				16000	50%	8000	25%	4000
Equivalent units of production						37000		33000

Cost per Equivalent Unit of Production
					Materials		Conversion
Beginning costs					$      48,100.00		$    19,800.00
During the month costs					$      96,200.00		$ 1,07,250.00
Total cost				Costs	$   1,44,300.00	Costs	$ 1,27,050.00
÷	Equivalent units of production			EUP	37000	EUP	33000
Cost per equivalent unit of production					$                3.90		$              3.85

Cost of units transferred out				EUP	Cost/ EUP	Total Cost
Direct Materials				29000	$      3.90	$   1,13,100.00
Conversion				29000	$      3.85	$   1,11,650.00
Total costs transferred out						$   2,24,750.00

Cost of ending work in process				EUP	Cost/ EUP	Total Cost
Direct Materials				8000	$      3.90	$      31,200.00
Conversion				4000	$      3.85	$      15,400.00
Total cost of ending work in process						$      46,600.00