Question

Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.

The second department (Polishing) had the following physical flow schedule for December:

Units to account for:
Units, beginning work in process	4,000	(40% complete)
Units started	?
Total units to account for	?
Units accounted for:
Units, ending work in process	8,000	(50% complete)
Units completed	?
Units accounted for	?

Costs in beginning work in process for the Polishing Department were direct materials, $4,000; conversion costs, $7,000; and transferred in, $9,000. Costs added during the month: direct materials, $33,000; conversion costs, $47,000; and transferred in, $39,000.

Required:

1. Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.

Fordman Company
Schedule of Equivalent Units
For the month of December

	Direct Materials	Conversion Costs	Transferred In
Units completed
Ending WIP:
x %
x %
Total equivalent units

Feedback

To calculate equivalent units, weighted average counts prior-period output in BWIP as belonging to the current period. So all completed units are treated as output of the current period.

2. Compute the unit cost for the month. If required, round your answer to the nearest cent.
$ per equivalent unit

Answer 1

Solution 1:

Computation of Equivalent unit of Production - Polishing Department
Particulars	Physical Units	Transferred in cost	Material	Conversion
Units to account for:
Beginning WIP	4000
Started into Production	20000
Total units to account for	24000
Unit completed & Transferred out	16000	16000	16000	16000
Closing WIP:	8000
Prior deparment cost (100%)		8000
Material (50%)			4000
Conversion (50%)				4000
Equivalent units of production	24000	24000	20000	20000

Solution 2:

Computation of Cost per equivalent unit of Production - Polishing Department
Particulars	Transferred in cost	Material	Conversion
Opening WIP	$9,000.00	$4,000.00	$7,000.00
Cost Added during Period	$39,000.00	$33,000.00	$47,000.00
Total cost to be accounted for	$48,000.00	$37,000.00	$54,000.00
Equivalent units of production	24000	20000	20000
Cost per Equivalent unit	$2.00	$1.85	$2.70

Cost per equivalent unit = $2 + $1.85 + $2.70 = $6.55 per unit