Question

Problem 2 Watson Company has a polishing. During October.th polishing department. The cost $40.000. Direct materials are upany has a product that passes through two processes: grinding and uring October, the grinding department transferred 20.000 units to the 9 department. The cost of the units transferred into the second department was measured the same way in both departments Direct materials are added uniformly in the second process Units are econd department (polishing) had the following physical flow schedule for The second department (p October Units to account for: Units, beginning work in process 4,000 (40% complete) Units started Total units to account for Units accounted for: Units, ending work in process 8,000 (50% complete) Units completed Units accounted for Costs in beginning work in process for the polishing department were direct materials, 90.000conversion costs. $6,000, and transferred in. $8.000. Costs added during the month: materials, $32,000; conversion costs, $50,000, and transferred in, $40,000. a. Assuming the use of the weighted average method, prepare a schedule of the equivalent units b. Compute the unit cost for the month. C. Assuming the use of the FIFO method, prepare a schedule of the equivalent units. d. Recalculate the unit cost for the month using FIFO.

Answer 1

1. Weighted average method:

		Equivalent units
	Physical units	Transfer in	Material	Conversion
Beginning WIP	4,000
Units started	20,000
Total	24,000
Units completed	16,000	16,000	16,000	16,000
Ending WIP	8,000	8,000	4,000	4,000
Equivalent units	24,000	24,000	20,000	20,000

	Transfer in	Material	Conversion
Total cost	$48,000 (8,000+40,000)	$37,000 (5,000+32,000)	$56,000 (6,000+50,000)
Equivalent units	24,000	20,000	20,000
Cost per unit	$2	$1.85	$2.8

2. FIFO method

		Equivalent units
	Physical units	Transfer in	Material	Conversion
Beginning WIP	4,000	0	2,400	2,400
Units started and completed	12,000	12,000	12,000	12,000
Units completed and transferred	16,000
Ending WIP	8,000	8,000	4,000	4,000
Equivalent units	24,000	20,000	18,400	18,400

	Transfer in	Material	Conversion
Cost added during the month	$40,000	$32,000	$50,000
Equivalent units	20,000	18,400	18,400
Cost per unit	$2	$1.74	$2.72