Question

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,400 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $666,408 in total. The ending work in process inventory in January consisted of 2,600 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

	Materials			Labor			Overhead
Cost per equivalent unit	$	12.60		$	3.50		$	7.50

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Answer 1

1)

	Material	Labor	overhead
Equivalent unit for ending work in process inventory	2,080 (2,600 ×80%)	1,560 (2,600 ×60%)	1,560 (2,600 ×60%)

2)

Computation of cost of ending work in process inventory
	Materials	Labor	Overhead	Total
Equivalent units (a)	2,080	1,560	1,560
Cost per equivalent unit (b)	$12.6	$3.5	$7.5
Cost of ending work in process (a) × (b)	$26,208	$5,460	$11,700	$43,368

3)

Computation of cost of units transfered
	Materials	Labor	Overhead	Total
Equivalent units (a)	26,400	26,400	26,400
Cost per equivalent unit (b)	$12.6	$3.5	$7.5
Cost of units transfered (a) × (b)	$332,640	$92,400	$198,000	$623,040

4)

Cost reconcilliation Report
Particulars	Amount
Cost to be accounted for	$666,408
Cost accounted for as follows:
Cost of unit transfered out	$623,040
Cost of ending work in process inventory	$43,368
Total cost accounted for	$666,408