Question

Superior Micro Products uses the weighted average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,500 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $750,814 in total. The ending work in process inventory in January consisted of 3,200 units, which were 60% complete with respect to materials and 40% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows: Materials $ 14.20 Labor $ 4.10 Overhead $ 8.40 Cost per equivalent unit 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. Equivalent units in ending work in process = Physical units in ending WIP x Completion
Material = 3200 x 60% = 1920 units
Labor = 3200 x 40% = 1280 units
Overhead = 3200 x 40% = 1280 units

2. Cost of ending work in process = Equivalent units x Cost per equivalent unit
Material = 1920 x $14.20 = $27264
Labor = 1280 x $4.10 = $5248
Overhead = 1280 x $8.40 = $10752
Total Cost of ending work in process = $43264

3. Cost of units transferred = Equivalent units x Cost per equivalent unit
Material = 26500 x $14.20 = $376300
Labor = 26500 x $4.10 = $108650
Overhead = 26500 x $8.40 = $222600
Total Cost of units transferred = $707550

4.

Costs to be accounted for	$     750,814
Costs accounted for as follows
Cost of Ending work in process	$       43,264
Cost of Units transferred	$     707,550
Total Costs accounted for	$     750,814