Question

The Matsui Lubricants plant uses the weighted-average method to account for its work-in-process inventories. The accounting records show the following information for a particular day. Beginning WIP inventory Direct materials 992 Conversion costs 407 Current period costs Direct materials 18,540 10,538 Conversion costs Quantity information is obtained from the manufacturing records and includes the following. Beginning inventory 900 units (60% complete as to materials, 55% complete as to conversion) Current period units started Ending inventory 4,900 units 1,100 units (40% complete as to materials, 25% complete as to conversion) Exercise 8-33 (Algo) Compute Costs per Equivalent Unit: Weighted-Average Method (LO 8-3) Required: a. Compute the equivalent units for the materials and conversion cost calculations. b. Compute the cost per equivalent unit for direct materials and conversion costs.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	5,140	4,975

.

	Material	Conversion
Cost per equivalent Unit	$                    3.80	$                   2.20

Working

Reconciliation of Units
A	Opening WIP	900
B	Introduced	4,900
C=A+B	TOTAL	5,800
D	Transferred	4,700
E=C-D	Closing WIP	1,100

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	4,700			100%	4,700.0	100%	4,700
Closing WIP	1,100			40%	440.0	25%	275
Total	5,800			Total	5,140.0	Total	4,975

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 992	$ 407	$ 1,399
Cost incurred during period		$ 18,540	$ 10,538	$ 29,078
Total Cost to be accounted for		$ 19,532	$ 10,945	$ 30,477
Total Equivalent Units		5,140	4,975
Cost per Equivalent Units		$                   3.80	$                     2.20