Question

Cost Information and the Weighted Average Method Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below. Direct Materials Conversion Costs Units completed 40,000 40,000 Add: Units in ending work in process × Percentage complete: 10,000 × 100% direct materials 10,000 — 10,000 × 40% conversion materials — 4,000 Eqivalent units of output 50,000 44,000 Costs: Work in process, December 1: Direct materials $62,000 Conversion costs 12,000 Total work in process $74,000 Current costs: Direct materials $530,000 Conversion costs 186,000 Total current costs $716,000 Required: 1. Calculate the unit cost for December, using the weighted average method. Round interim calculations to the nearest cent and, if required, round your answer to the nearest cent. $ per equivalent unit 2. Calculate the cost of goods transferred out, calculate the cost of EWIP, and reconcile the costs assigned with the costs to account for. Round interim calculations to the nearest cent and, if required, round your answer to the nearest dollar. Cost of goods transferred out: Units completed $ Cost of EWIP Total costs assigned (accounted for) $ Reconciliation Cost to account for: BWIP $ Current (December) Total $ 3. What if you were asked to show that the weighted average unit cost for materials is the blend of the November unit materials cost and the December unit materials cost? The November unit materials cost is $6.20 ($62,000 / 10,000), and the December unit materials cost is $13.25 ($530,000 / 40,000). The equivalent units in BWIP are 10,000, and the FIFO equivalent units are 40,000. Calculate the weighted average unit materials cost using weights defined as the proportion of total units completed from each source (BWIP output and current output). Round interim calculations to the nearest cent and, if required, round your answer to the nearest cent. $ per unit

Answer 1

1.
Unit costs = (Beginning Cost + Cost added) / Equivalent units
Material = ($62000+530000)/50000 = $11.84 per unit
Conversion = ($12000+186000)/44000 = $4.50 per unit

2.

	Materials	Conversion	Total
Ending work in Process Inventory
Equivalent units of Production	10000	4000
Cost per equivalent unit	$             11.84	$                  4.50
Cost of Ending work in Process Inventory	$        1,18,400	$             18,000	$    1,36,400
Units Completed and transferred out
Units transferred to next department	40000	40000
Cost per equivalent unit	$             11.84	$                  4.50
Cost of units transferred out	$        4,73,600	$          1,80,000	$    6,53,600

Reconciliation
Costs to be accounted for :
Cost of beginning work in process inventory	$           74,000
Costs added to the production during the year	$        7,16,000
Total Costs to be accounted for	$        7,90,000
Cost of Ending work in Process Inventory	$        1,36,400
Cost of units transferred out	$        6,53,600
Total Costs accounted for	$        7,90,000

3.
Weighted average unit material cost = $6.20 x 1/5 + $13.25 x 4/5 = $11.84 per unit