Question

Vista Vacuum Company has the following production information for the month of March. All materials are added at the beginning of the manufacturing process.   

Units

• Beginning inventory of 4,400 units that are 100 percent complete for materials and 28 percent complete for conversion.
• 15,100 units started during the period.
• Ending inventory of 3,800 units that are 14 percent complete for conversion.

Manufacturing Costs

• Beginning inventory was $19,500 ($9,100 materials and $10,400 conversion costs).
• Costs added during the month were $30,000 for materials and $54,600 for conversion ($27,600 labor and $27,000 applied overhead).

Assume the company uses Weighted-Average Method.

Required:
1. Calculate the number of equivalent units of production for materials and conversion for March.
2. Calculate the cost per equivalent unit for materials and conversion for March.
3. Determine the costs to be assigned to the units transferred out and the units still in process.

Answer 1

Answers

• Requirement 1

	Physical units	Material	Conversion
Units completed	15700	15700	15700
Ending Inventory	3800	3800	532
TOTAL	19500	19,500	16,232

--Working

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	15,700	100%	15,700	100%	15,700
Units of ENDING WIP	3,800	100%	3,800	14%	532
Equivalent Units of Production			19,500		16,232

• Requirement 2

	Material	Conversion
Cost per Equivalent units	$              2.00513	$                                      4.00444

--Working:

COST per EUP			Material		Conversion
Cost of Beginning WIP			$             9,100.00		$                                  10,400.00
Cost incurred during the period			$          30,000.00		$                                  54,600.00
Total Costs		Costs	$          39,100.00	Costs	$                                  65,000.00
Equivalent units of production		EUP	19,500	EUP	16,232
Cost per EUP			$              2.00513		$                                      4.00444

• Requirement 3

	Direct material	Conversion cost	Total
Units Completed	$                   31,481	$          62,870	$                  94,350
Ending Inventory	$                      7,619	$            2,130	$                    9,750
Total Cost accounted for	$                   39,100	$          65,000	$               104,100

--Working

	Direct material	Conversion cost
Units Completed	=15700*2.00513	=15700*4.00444
Ending Inventory	=3800*2.00513	=532*4.00444