Question

Victory Company uses weighted average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 705,000 units of product to finished goods. At the end of November, the work in process inventory consists of 204,000 units that are 50% complete with respect to conversion. Beginning inventory had $354,510 of direct materials and $201,750 of conversion cost. The direct material cost added in November is $2,372,490, and the conversion cost added is $3,833,250. Beginning work in process consisted of 71,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion of the units completed, 71,000 were from beginning work in process and 634,000 units were started and completed during the period. 2. Compute both the direct material cost and the conversion cost per equivalent unit. Cost per equivalent unit of production Materials Conversion Total costs Costs Costs EUP EUP + Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals)

Answer 1

Solution:

Equivalent units of production (EUP) - Weighted Average method
	Units	%Material	EUP-Material	% Conversion	EUP- Conversion
Units Transferred Out	705000	100%	705000	100%	705000
units of Ending work in process	204000	100%	204000	50%	102000
Equivalent units of production			909000		807000
Cost per EUP			Material		Conversion
Cost of beginning Work in Process			$3,54,510		$2,01,750
Cost Addrd during the period			$23,72,490		$38,33,250
Total Costs		Costs	$27,27,000	Costs	$40,35,000
/Equivalent units of Production		EUP	909000	EUP	807000
Cost per Equivalent unit of Production			$3.00		$5.00