Question

The following partially completed process cost summary describes the July production activities of Ashad Company. Its production output is sent to its warehouse for shipping. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion.

Equivalent Units of Production	Direct Materials			Conversion
Units transferred out		35,000	EUP		35,000	EUP
Units of ending work in process		2,500	EUP		1,500	EUP
Equivalent units of production		37,500	EUP		36,500	EUP

Costs per EUP	Direct Materials				Conversion
Costs of beginning work in process		$	18,450			$	2,280
Costs incurred this period			394,050				205,770
Total costs		$	412,500			$	208,050

Units in beginning work in process (all completed during July)	2,000
Units started this period	35,500
Units completed and transferred out	35,000
Units in ending work in process	2,500

Answer 1

Solution:

Computation of Cost per equivalent unit of Production - Weighted Average - Ashad Company
Particulars	Material	Conversion
Opening WIP	$18,450.00	$2,280.00
Cost Added during July	$394,050.00	$205,770.00
Total cost to be accounted for	$412,500.00	$208,050.00
Equivalent units of production	37500	36500
Cost per Equivalent unit	$11.00	$5.70

Computation of Cost of ending WIP and units completed & transferred out - Ashad Company
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	2500	1500
Cost per equivalent unit	$11.00	$5.70
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$27,500	$8,550	$36,050
Units completed and transferred	35000	35000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$385,000	$199,500	$584,500

Cost reconciliation - Ashad Company
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$20,730.00
Cost added to production	$599,820.00
Total Cost to be accounted for	$620,550.00
Costs accounted for as follows:
Cost of unit transferred out	$584,500
Ending WIP:
Material	$27,500
Converison	$8,550
Total Ending WIP	$36,050
Total cost accounted for	$620,550