Question

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking....

Weston Products manufactures an industrial cleaning compound that goes through three processing departments—Grinding, Mixing, and Cooking. All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given below:

Work in Process—Grinding Department
Inventory, May 1 93,100 Completed and transferred
to the Mixing Department
?
Materials 664,940
Conversion 471,216
Inventory, May 31 ?

The May 1 work in process inventory consisted of 35,000 pounds with $51,100 in materials cost and $42,000 in conversion cost. The May 1 work in process inventory was 100% complete with respect to materials and 30% complete with respect to conversion. During May, 407,000 pounds were started into production. The May 31 inventory consisted of 133,000 pounds that were 100% complete with respect to materials and 60% complete with respect to conversion. The company uses the weighted-average method in its process costing system.

Required:

1. Compute the Grinding Department's equivalent units of production for materials and conversion in May.

2. Compute the Grinding Department's costs per equivalent unit for materials and conversion for May.

3. Compute the Grinding Department's cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the Grinding Department's cost of units transferred out to the Mixing Department for materials, conversion, and in total for May.

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Answer #1
Units Amount Units Amount
Opening WIP 35000 93100 Transferred to Mixing Dept. 309000
Materials 407000 664940 Closing WIP 133000
Conversion 471216
442000 442000
Computation of Equivalent units =Units transferred out + (Units in ending inventory × Percentage of completion)
Materials Conversion
Units Transferred 309000 309000
Closing WIP
133,000*100% 133000
133,000*60% 79800
Equivalent Units of Production 442000 388800
Computation of Cost per Equivalent Unit
Materials Conversion Total
Opening Cost 51100 42000 93100
Added during May 664940 471216 1136156
Total cost to be accounted for 716040 513216 1229256
/Total Equivalent Units 442000 388800
Cost per Equivalent unit 1.62 1.32 2.94
Computation of Cost of Units Transferred out
=Units Transferred out*Cost per Equivalent unit
=309000*$2.94
908460
Computation of Cost of Ending WIP
Materials Conversion Total
Closing WIP Equivalent Units 133000 79800
Cost per Equivalent unit 1.62 1.32
Total Cost of Ending WIP 215460 105336 320796
Verification:
Cost of Closing WIP = Total cost to be accounted for - Cost of units transferred out
320796 =1229256-908460
320796 320796
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