Question

Exercise 4-12 Equivalent Units; Assigning Costs; Cost Reconciliation-Weighted-Average Method [LO4-2, LO4-4, LO4-5]

Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,200 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $684,356 in total. The ending work in process inventory in January consisted of 3,700 units, which were 40% complete with respect to materials and 20% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:

	Materials			Labor			Overhead
Cost per equivalent unit	$	13.40		$	4.20		$	8.40

Required:

1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.

2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.

3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.

4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

	Materials Labor Overhead Total Cost of ending work in process inventory

	Materials Labor Overhead Total Cost of units completed and transferred out

Answer 1

Answers

• Requirements

Requirement 1
	Material	Labor	Overhead
Units completed	25,200	25,200	25,200
Units in ending WIP	1,480	740	740
Total Equivalent units	26,680	25,940	25,940

--Working

Requirement 1
	Material	Labor	Overhead
Units completed	=25200*100%	=25200*100%	=25200*100%
Units in ending WIP	=3700*40%	=3700*20%	=3700*20%

Requirement 2
		Material	Labor	Overhead	Total
A	Cost per Equivalent unit	$               13.40	$                                 4.20	$                      8.40
B	Equivalent units	1,480	740	740
C = A x B	Cost of ending WIP Inventory	$      19,832.00	$                         3,108.00	$              6,216.00	$          29,156.00
Requirement 3
		Material	Labor	Overhead	Total
A	Cost per Equivalent unit	$               13.40	$                                 4.20	$                      8.40
B	Equivalent units	25,200	25,200	25,200
C = A x B	Cost of units transferred	$    337,680.00	$                    105,840.00	$         211,680.00	$        655,200.00

Requirement 4
Cost to be accounted for:
Cost of beginning WIP invemtory and Cost added		$                    684,356.00
Cost accounted for:
Cost of ending WIP	$      29,156.00
Cost of units transferred	$    655,200.00
Total cost accounted for		$                    684,356.00