Question

The WireOne Company manufactures high-quality coated electrical wire in two departments, Weaving and Coating. Materials are introduced at various points during work in the Weaving Department. After the weaving is completed, the materials are transferred into the Coating Department, where specialty plastic coating is applied.

Selected data relating to the Weaving Department during May are given below:

Production data:
Kilograms in process, May 1(materials 100%           complete; conversion 80% complete)		127,500
Kilograms started into production during May		448,000
Kilograms completed and transferred to Coating		?
Kilograms in process, May 31(materials 65%           complete; conversion 30% complete)		68,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	113,475
Conversion cost	$	132,600
Cost added during May:
Materials cost	$	824,415
Conversion cost	$	437,532

The company uses the weighted-average method.

Compute the costs per equivalent unit for May. (Round your answers to 2 decimal places.)

     

Answer 1

Solution:

Weighted Average (Average Cost) Method

Physical Units Count

Under this method the percentage completion done in the Beginning Inventory is ignored while calculating the equivalent completed units during the current period. Beginning Inventory Units are treated as fresh units introduced for production.

Cost Accounted for:

- The cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed equivalent units.

- The units of Beginning Inventory of WIP and their cost are taken in full under this method

First of all we need to find out the physical flow of units

Physical Flow of Units
	Input		Output
Kilogram in Process, May 1	127,500	Kilograms completed and transferred to Coating (balancing figure)	507,500
Kilograms started into production during May	448,000	Kilograms in process, May 31	68,000
Total	575,500		575,500

Calculation of Costs per Equivalent Unit for May

Equivalent units of production - Weighted Average
	Units	% Materials	EUP - Material	% Conversion	EUP - Conversion
Kilograms completed and transferred to Coating	507,500	100%	507500	100%	507500
Kilograms in process, May 31	68,000	65%	44200	30%	20400
Total Units	575,500		551,700		527,900
Cost per equivalent unit of production			Materials		Conversion
Cost of Beginning Work IN Process			$113,475		$132,600
Cost added during the period			$824,415		$437,532
Total Costs		Costs	$937,890	Costs	$570,132
Equivalent units of production		EUP	551,700	EUP	527,900
Cost per equivalent unit of production (rounded to 2 decimals)			$1.70		$1.08

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you