Question

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the first process. During November, the first process transferred 705,000 units of product to the second process. Additional information for the first process follows. At the end of November, work in process inventory consists of 184,000 units that are 50% complete with respect to conversion. Beginning work in process inventory had $288,925 of direct materials and $59,775 of conversion cost. The direct material cost added in November is $1,933,575, and the conversion cost added is $1,135,725. Beginning work in process consisted of 65,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 65,000 were from beginning work in process and 640,000 units were started and completed during the period.

Required:
For the first process:
1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory.(Round "Cost per EUP" to 2 decimal places.)

Answer 1

1) Equivalent unit

	Units	% Material	EUP-Material	% Conversion	EUP-Conversion
Unit transferred out	705000	100%	705000	100%	705000
Ending WIP	184000	100%	184000	50%	92000
Total Units	889000		889000		797000

2) cost per equivalent unit

		Material		Conversion
Beginning WIP		288925		59775
Cost added		1933575		1135725
Total Cost	Costs	2222500	Costs	1195500
Equivalent unit	EUP	889000	EUP	797000
Cost per equivalent unit		2.5		1.5

3) Cost reconciliation

Cost of Units transferred out	EUP	cost per EUP	Total Cost
Direct material	705000	2.5	1762500
Conversion	705000	1.5	1057500
Total Cost transferred out				2820000
Cost of ending WIP	EUP	Cost per EUP	Total Cost
Direct material	184000	2.5	460000
Conversion	92000	1.5	138000
Total Cost of ending work in process				598000
Total Cost accounted for				3418000