Question

Weighted-average method, assigning costs (continuation of 17-24).

Required:

For the data in Exercise 17-24, summarize the total costs to account for, calculate the cost per equivalent

unit for direct materials and conversion costs, and assign costs to the units completed (and transferred out)

and units in ending work in process.

Reference 17-24 :

Weighted-average method, equivalent units. The assembly division of Quality Time Pieces, Inc. uses the weighted-average method of process costing. Consider the following data for the month of May 2017:

Answer 1

Weighted Average Costing Method

The Weighted Average process costing method is used to compute the cost of the units as per the contribution done by the material and the other overheads (labor and factory). The cost includes the part of material and other overheads. The average of all the weights is taken to come up with the resultant cost.

The units completed and transferred out are mentioned below:

The units completed and transferred out is computed by adding the opening WIP units in the units started in production and after that deducting the closing WIP units.

The equivalent units are computed according to the conversion percentage as material and conversion its basis:

The outcome of the above excel is mentioned below:

The above equivalent units are computed using appropriate formulas and the resultant is the closing Work-in-progress(WIP) units.

The total cost incurred till date on material units is computed below:

The total cost is computed by adding the beginning cost of WIP to the cost added to the materials during the time period.

The total cost incurred till date on conversion units is computed below:

The total cost is computed by adding the beginning cost of WIP to the cost added to the conversion during the time period.

The cost per unit of the equivalent units as material and conversion as the basis and the cost assigned to the closing WIP is mentioned below:

The outcome of the above excel is mentioned below:

The costs computed above are calculated using appropriate formula. The equivalent cost per unit of material is and equivalent cost per unit of conversion is .

The cost assigned to the units completed and transferred out as material its basis is and cost assigned to the units completed and transferred out as conversion its basis is .

The cost assigned to the ending Work-in-progress units as material its basis is and cost assigned to the ending Work-in-progress units as conversion its basis is .