Question

Kurtulus Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

            
Beginning work in process inventory:           
Units in beginning work in process inventory      1,300     
Materials costs   $   7,700     
Conversion costs   $   3,000     
Percent complete with respect to materials      55   %
Percent complete with respect to conversion      25   %
Units started into production during the month      7,200     
Units transferred to the next department during the month      6,400     
Materials costs added during the month   $   110,800     
Conversion costs added during the month   $   83,900     
Ending work in process inventory:           
Units in ending work in process inventory      2,100     
Percent complete with respect to materials      70   %
Percent complete with respect to conversion      55   %

Answer 1

Sol: Calculation showing the cost to be transferred out for the month :-

Cost of Units Transferred Out - Direct Materials - Conversion Total Cost transferred Out Equivalent units of Cost per Equivalent Total Cost (in %) production units of production 6,400.00 15.06 96,384.00 6,400.00 12.06 77,184.00 1,73,568.00

Now let us move forward and understand how Equivalent units of production is calculated using Weighted Average Method in the working given below:-

Equivalent Units of Production Units % Material EUP Materials % Conversion EUP - Conversion Units transferred 6400 100% 6400 100% 6400 Units of ending WIP 2100 70% 1470 55% 808.5 Equivalent Units of Production 7870 7208.5

*Note :- for calculation we have taken 7208.50 units as 7209 units.

Now we have to find the Cost per unit of Equivalent units of Production, here is the explanation :-

Cost per Equivalent units of production Material Conversion Conversion Cost of Beginning WIP $ 7700 $ 3000 Cost incurred during the period $ 110800 $ 83900 Total Costs Incurred $ 118500 $ 86900 Equivalent units of production 7,870 7,209 Cost per Equivalent units of production $ 15.06 $ 12.06