In: Accounting
Ascertaining the cost of equivalent units using Weighted Average costing.
At the end of the month, Michael Company calculated equivalent units of production in the Packaging Department as shown below:
The Direct Material Cost of $8 and the Conversion Cost of $9 is applied to the number of Equivalent units for both Completed & Transferred Units and the Ending WIP Units.
Cost of Ending WIP = (Equivalent Units for DM x Unit DM Cost) + (Equivalent units for Conv Cost x Conv Cost per unit)
= (5000 x $8) + (3000 x $9)
= $67,000
Cost of Completed & Transferred Units = (Equivalent Units for DM x Unit DM Cost) + (Equivalent units for Conv Cost x Conv Cost per unit)
= (51000 x $8) + (51000 x $9)
= $867,000