Question

Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May:

		Percent Completed
	Tons of Pulp	Materials		Conversion
Work-in-Process Inventory, May 1	4,000	100	%	50	%
Started during May	15,000
Units to account for	19,000
Units from beginning Work-in-Process, which were completed and transferred out during May	4,000
Started and completed during May	9,000
Work-in-Process Inventory, May 31	6,000	100	%	50	%
Total units accounted for	19,000

The following cost data are available:

Work-in-Process Inventory, May 1
Direct materials	$	62,310
Conversion		94,760
Costs incurred during May
Direct materials		238,650
Conversion		315,000

Required:

1. Calculate the equivalent units of direct materials and conversion during May. Use the weighted-average method.

	Equivalent Units
Direct Materials
Conversion

2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the weighted-average method.

	Cost per Equivalent Unit
Direct Materials
Conversion

Answer 1

Solution

Requirement 1

	Equivalent units
Material	19,000
Conversion	16,000

.

Requirement 2

	Cost per equivalent Unit
Material	$                  15.84
Conversion	$                  25.61

Working

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	13,000			100%	13,000	100%	13,000
Ending WIP	6,000			100%	6,000	50%	3,000
Total	19,000			Total	19,000	Total	16,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 62,310	$ 94,760	$ 157,070
Cost incurred during period (B)		$ 238,650	$ 315,000	$ 553,650
Total Cost to be accounted for (C=A+B)		$ 300,960	$ 409,760	$ 710,720
Total Equivalent Units(D)		19,000	16,000
Cost per Equivalent Units (E=C/D)		$ 15.84	$ 25.61	$ 41.45