Question

Polymer Industries uses weighted average process costing to value its inventories. For May, it furnishes the following information regarding the final step (the finishing department) in making its product. This department receives the product from the mixing department.

• The only additional cost incurred in the finishing department is conversion, which is incurred uniformly.

• Opening WIP of 45,000 units was valued at $505,000 for transferred in costs and $41,600 for conversion. These units were 20% done for conversion.

• The finishing department received 155,000 units during May. The department’s WIP account was debited $1,745,000 toward the transferred in costs of these units.

• The department spent $762,000 toward conversion costs.

• 140,000 units were completed and transferred out during May.

• Ending WIP was 40% done for conversion.

Determine the following (compute cost / EU to four decimal places, if needed):

Number of units in ending WIP		Value of ending WIP
Cost per equivalent unit for May (transfer in)		Value of units transferred out (COGM)
Cost per equivalent unit for May (conversion)

Answer 1

1.)	Number of units in Ending WIP	60,000	=45000+155000-140000
2.)		Transfer in
	Units Completed & Transfer out	140,000
	Ending WIP -60,000	60,000
	Equivalent Units	200,000
		Transfer in
	Cost of Beginning WIP	505,000
	Add: Cost of transferred units	1,745,000
	Total Cost $	2,250,000
	Cost per Equivalent unit for May	$ 11.2500	=2250000/200000
	( Transfer in )
3.)		Conversion
	Units Completed & Transfer out	140,000
	Ending WIP -60,000 x 40%	24,000
	Equivalent Units	164,000
		Conversion
	Cost of Beginning WIP	41,600
	Add: Cost of conversion of May	762,000
	Total Cost $	803,600
	Cost per Equivalent unit for May	$ 4.9000	=803600/164000
	( Conversion )
4.)		Amount $
	Units Transfer In	675,000	=60000*11.2500
	Conversion	117,600	=24000*4.9000
	Value of Ending WIP	792,600
5.)		Amount $
	Units Transfer In	1,575,000	=140000*11.2500
	Conversion	686,000	=140000*4.9000
	Value of units transferred out	2,261,000