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 first process. During November, the first process transferred 750,000 units of product to the second process. Additional information for the first process follows. At the end of November, work in process inventory consists of 199,000 units that are 70% complete with respect to conversion. Beginning work in process inventory had $246,740 of direct materials and $66,698 of conversion cost. The direct material cost added in November is $1,651,260, and the conversion cost added is $1,267,252. Beginning work in process consisted of 76,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 76,000 were from beginning work in process and 674,000 units were started and completed during the period.

1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)

Answer 1

1) Equivalent unit

	EUP-Material	EUP-Conversion
Unit transferred out	750000	750000
Ending work in process	199000	199000*70% = 139300
Equivalent unit	949000	889300

2) Cost per equivalent unit

	material	Conversion
Beginning WIP	246740	66698
Cost added	1651260	1267252
Total Cost	1898000	1333950
Equivalent unit	949000	889300
cost per equivalent unit	2	1.5

3) Cost assigned

	Material	Conversion	Total
Cost of unit transferred out	1500000	1125000	2625000
Ending work in process	398000	208950	606950