Question

The following information is known about a company's process costing system for the latest period:

Stage of completion Materials Conversion cost 759 106 Reyning inventory 21,000 units Erling inventory. 20,000 units Lails are 60.000 mit Materials Costs Conversion costs S94,240 105.760) Begitung Inventory Current period costs S$2,500 129.500)

Determine the cost of ending work-in-process and cost of goods manufacture. The company uses weighted-average. Show all computations.

Answer 1

Under weighted average method, equivalent units are to be calculated only for units completed & transferred out and units lying as ending work in process as it is assumed that the units once entered into the process become integral part of total units and no segregation between units transferred from beginning work in process and introduced during current process. Conversion cost includes Labor + Overheads. So, % of completion of beginning Work in Process Inventory doesn't affect the calculation of equivalent units of production. Physical Units of production: Units in beginning inventory Add: Units started during current period Less: Units in ending inventory Units completed and transferred out 24,000 60,000 -30,000 54,000 Particulars Physical Units EUP- EUP- Materials Conversion Completed and transferred Ending work in process Equivalent Units of Production (EUP) 54,000 30,000 84,000 54,000 9,000 63,000 54,000 [54000 units x 100%; 54000 units x 100%] 12,000 [30000 units x 30%; 30000 units x 40%] 66,000

Cost per equivalent units of production Cost of beginning work in process Cost added during the period Total Costs Equivalent units of Production (EUP) Cost per Equivalent units of Production Materials $82,500 $129,500 $212,000 63,000 $3.36508 Conversion $94,240 $105,760 $200,000 66,000 [As computed EUP schedule presented above] $3.03030 [$212000 / 63000 units = $3.36508; $200000 / 66000 units = $3.03030] Cost of ending work in process EUP Totals Cost per EUP $3.36508 $3.03030 Materials Conversion Total Cost of ending work in process 9,000 12,000 $30,286 [9000 units x $3.36508] $36,364 [12000 units x $3.03030] $66,650 Cost per Cost of goods completed & transferred EUP Totals Materials Conversion Total Cost of goods manufactured 54,000 54,000 EUP $3.36508 $3.03030 $181,714 (54000 units x $3.36508] $163,636 [54000 units x $3.03030] $345,350