Question

Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Alpha started into production 10,000 units. At the end of the month there were 5,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 60% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP:

            Direct Material                      $20,000

            Direct Labor                              8,000

            Factory Overhead                   32,000

Alpha uses the weighted-average process costing method. Use this information to determine for the month of March: (Round & enter final answers to the nearest penny.)

            1. the cost per equivalent unit of direct material

            2. the cost per equivalent unit of conversion

            3. the cost per unit transferred to finished goods

Answer 1

Solution

The cost per equivalent unit of direct material= $ 2 per unit

The cost per equivalent unit of conversion =$ 5 per unit

The cost per unit transferred to finished goods= $ 7 Per unit

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	5,000			100%	5,000	100%	5,000
Ending WIP	5,000			100%	5,000	60%	3,000
Total	10,000			Total	10,000	Total	8,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost				$ 0
Cost incurred during period		$ 20,000	$ 40,000	$ 60,000
Total Cost to be accounted for		$ 20,000	$ 40,000	$ 60,000
Total Equivalent Units		10,000	8,000
Cost per Equivalent Units		$                   2.00	$                     5.00	$                7.00