Question

1. Annenbaum Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete 65% 45% Materials costs Conversion costs $ 5,700 $ 6,800 A total of 6,500 units were started and 5,900 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Cost Materials costs $ 125,500 Conversion costs $ 207,000 The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs. The cost per equivalent unit for materials for the month in the first processing department is closest to: A) $19.01 B) $19.61 I C) $20.50 D) $18.19

Answer 1

Solution:

Annenbaum Corporation
Production Cost report - First Processing Department
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	400
Started into Production	6500
Total units to account for	6900
Units accounted for:
Unit completed & Transferred out	5900	5900	5900
Units in ending inventory:	1000
Material (50%)		500
Conversion (35%)			350
Equivalent units of production	6900	6400	6250

Annenbaum Corporation Computation of Cost per equivalent unit - First Processing Department
Particulars	Material	Conversion	Total
Opening WIP	$5,700	$6,800	$12,500
Cost Added during Period	$125,500	$207,000	$332,500
Total cost to be accounted for	$131,200	$213,800	$345,000
Equivalent units of production	6400	6250
Cost per Equivalent unit	$20.50	$34.21

Hence option C is correct.