Question

Exercise 5-12 Equivalent Units; Assigning Costs; Cost Reconciliation-Weighted Average Method [LO5-2, LO5-4, LO5-5) Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 25,900 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $682,902 in total. The ending work in process inventory in January consisted of 3,600 units, which were 70% complete with respect to materials and 50% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows: Cost per equivalent unit Materials $ 13.60 Labor $ 3.40 Overhead $ 7.30 Required: 1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month. 2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January 3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January 4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)

Answer 1

1	Equivalent units in ending work in process inventory = Physical units in ending inventory * % completed
		Units	% Completed	Working	Equivalent Units
	Material	3,600	70%	= 3,600 * 70%	2,520
	Labour	3,600	50%	= 3,600 * 50%	1,800
	Overhead	3,600	50%	= 3,600 * 50%	1,800

2	Cost of ending work in process inventory = Equivalent Units x Cost per equivalent unit
		Equivalent Units	Cost per Equivalent Unit	Working	Cost of ending WIP
	Material	2,520	13.60	= 2,520 * $13.60	34,272.00
	Labour	1,800	3.40	= 1,800 * $3.40	6,120.00
	Overhead	1,800	7.30	= 1,800 * $7.30	13,140.00
				Total	53,532.00

3	Cost of Units Transferred = Transferred Units x Cost per equivalent unit
		Units Transferred	Cost per Equivalent Unit	Working	Cost of Units Transferred
	Material	25,900	13.60	= 25,900 * $13.60	3,52,240.00
	Labour	25,900	3.40	= 25,900 * $3.40	88,060.00
	Overhead	25,900	7.30	= 25,900 * $7.30	1,89,070.00
				Total	6,29,370.00

4	Cost Reconciliation for January
	Costs to be accounted for	6,82,902
	Costs accounted for as follows
	Cost of Units transferred	6,29,370
	Cost of Ending work in process	53,532
	Total Costs accounted for	6,82,902

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