Question

South River Chemical manufactures a product called Zbek. Direct materials are added at the beginning of the process, and conversion activity occurs uniformly throughout production. The beginning work in process inventory is 60% complete with respect to conversion; the ending inventory work in process inventory is 20% complete. The following data pertain to May:

Units

Work in process, May 1    15,000

Units started during May 60,000

Units completed and transferred out    68,000

Work in process, May 31    7,000

   Direct Materials    Conversion Cost Total Costs

Cost:

Work in Process, May 1 $16,500 $24,750    $41,250

Costs incurred during May 72,000    162,630    234,630

Totals $88,500 $187,380    $275,880

Compute the following amounts:
1. Using the weighted-average method of process costing, determine the equivalent units for direct material and conversion. (Please show your work.)

2. What is the cost per unit of direct material and conversion activity? (Please show your work.)

3. Determine the cost of the goods completed and transferred out during May. (Please show your work.)

4. Determine the cost of the ending work in process on May 31. (Please show your work.)

Answer 1

PRODUCTION REPORT - WEIGHTED AVERAGE METHOD
Quantity Schedule and Equivalent Units
		Quantity		Percentage Complete:
		Schedule				Materials		Conversion
	Units to be accounted for:			Beginning:		100%	*	60%
	Work in process, beginning	15000	*
	Started into production	60000	*	Ending:		100%	*	20%
	Total units to be accounted for	75,000
				Equivalent Units (EU)
	Units accounted for as follows:			Materials		Labor
	Transferred Out	68000	*	68,000		68,000
	Work in process, ending	7000	*	7,000		1,400
	Total units accounted for	75,000		75,000		69,400	Ans 1
Unit Costs
	Work in process, beginning	41,250		16,500	*	24,750
	Cost added by the department	234,630		72,000	*	162,630
	Total cost (a)	275,880		88,500		187,380
	Equivalent units (b)			75,000		69,400
	Unit cost, (a)/(b)	3.88	=	1.18	+	2.70	Ans 2
Cost Reconciliation				Equivalent Units (EU)
		Costs
	Cost to be accounted for:
	Work in process, beginning	41,250
	Cost added by the department	234,630
	Total cost to be accounted for	275,880
	Cost accounted for as follows:
3.88	for Transferred Out units	263,840		68,000		68,000	Ans 3
		(68000 x3.88)
	Work in process, ending:
1.18	for Materials per EU (1.18 x 7000)	8,260		7,000
2.70	for Conversion per EU (2.70 x 1400)	3,780				1,400
	Total work in process, ending	12,040					Ans 4
	Total cost accounted for	275,880