Question

EXERCISE 4-12 Cost Assignment; Cost Reconciliation-Weighted-Average Method [L04-2, L04-4 L04-5] Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,000 units and transferred them to the next department. The cost of beginning inventory and the costs added during January amounted to $599,780 in total. The ending inventory in January consisted of 3,000 units, which were 80% complete with respect to materials and 60% complete with respect to labor and over- head. The costs per equivalent unit for the month were as follows: Labor Overhead Materials Cost per equivalent unit $12.50 $3.20 $6.40 Required: 1. Compute the equivalent units of materials, labor, and overhead in the ending inventory for the month. 2. Compute the cost of ending inventory and of the units transferred to the next department for January 3. 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 inventory and costs added during the month.)

Answer 1

Requirement 1

Equivalent units of production

27,400

26,800.0

26,800

Requirement 2

	Material	Labor	Overhead	Total
Cost of ending work in process	$         30,000.00	$          5,760.00	$    11,520.00	$       47,280.00
Cost of Units Completed and transferred out	$       312,500.00	$        80,000.00	$ 160,000.00	$     552,500.00

Requirement 3

Cost reconciliation
Total cost to be accounted for	$       599,780.00
Costs accounted for as follows
Cost of ending work in process	$         47,280.00
Cost of Units Completed and transferred out	$       552,500.00
Total costs accounted for	$       599,780.00

Working

Statement of Equivalent Units(Weighted average)
		Material		Labor		Overhead
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	25,000	100%	25,000.0	100%	25,000.0	100%	25,000
Closing WIP	3,000	80%	2,400.0	60%	1,800.0	60%	1,800
Total	28,000		27,400	Total	26,800.0	Total	26,800

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$                 12.50	2,400	$    30,000.00	25,000	$ 312,500
Labor	$                    3.20	1,800	$      5,760.00	25,000	$ 80,000
Overhead	$                    6.40	1,800	$    11,520.00	25,000	$ 160,000
		TOTAL	$ 47,280	TOTAL	$ 552,500