Question

During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 66,000 were in process in the production department at the beginning of April and 264,000 were started and completed in April. April's beginning inventory units were 65% complete with respect to materials and 35% complete with respect to conversion. At the end of April, 88,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion.

Exercise 3-9 Weighted average: Costs assigned to output and inventories LO C2

The production department had $918,775 of direct materials and $723,261 of conversion costs charged to it during April. Also, its beginning inventory of $185,284 consists of $142,285 of direct materials cost and $42,999 of conversion costs.

1&2. Using the weighted-average method, compute the direct materials cost and the conversion cost per equivalent unit and assign April's costs to the department’s output.

Answer 1

Equivalent units of production (EUP)­ weighted average method
	Units	% Materials	EUP­ Materials	% Conversion	EUP­ Conversion
Units completed and transferred out	330000	100%	330000	100%	330000
Ending goods in process ­ units	88000	80%	70400	30%	26400
Total units	418000		400400		356400
Cost per equivalent unit of production			Materials		Conversion
Costs of beginning work in process			142285		42999
Costs incurred this period			918775		723261
Total costs			1061060		766260
÷ Equivalent units of production			400400		356400
Cost per equivalent unit of production			2.65		2.15
Total costs accounted for:	EUP	Cost per EUP	Total cost
Cost of units transferred out:
Direct materials	330000	2.65	874500
Conversion	330000	2.15	709500
Total costs transferred out				1584000
Costs of ending goods in process:	EUP	Cost per EUP	Total cost
Direct materials	70400	2.65	186560
Conversion	26400	2.15	56760
Total cost of ending goods in process				243320
Total costs accounted for				1827320