Question

Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All...

Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Alpha started into production 10,000 units. At the end of the month there were 5,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 40% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP:

            Direct Material                      $20,000

            Direct Labor                              9,000

            Factory Overhead                   40,000

Alpha uses the weighted-average process costing method. Use this information to determine for the month of March: (Round & enter final answers to the nearest whole dollar.)

            1. the total cost transferred to the finished goods inventory

            2. the total cost of the ending Work in Process inventory

Homework Answers

Answer #1

Calculation of Equivalent Units (EU):-

Particulars Units % Materials EU of Materials % Conversion EU of Conversion
Units Completed 5000 100% 5000 100% 5000
Ending Work in Process 5000 100% 5000 40% 2000
Total Equivalent Units 10000 10000 7000

Cost Per Equivalent Unit :-

Direct Materials = $20000 / 10000 = $2 per equivalent unit

Conversion Cost = ($9000 + $40000) / 7000 = $49000 / 7000 = $7 per equivalent unit

1) Calculation of Total costs Transferred to Finished Goods :-

Particulars Equi. Unit Cost per Equi. Unit Total Cost
Direct Materials 5000 $2 $10000
Conversion 5000 $7 $35000
Total Cost $45000

Calculation of Cost of Ending Work in Process :-

Particulars Equi. Unit Cost per Equi. Unit Total Cost
Direct Materials 5000 $2 $10000
Conversion 2000 $7 $14000
Total Cost $24000
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