Question

Weighted Average Method, Equivalent Units, Unit Cost, Multiple Departments

Fordman Company has a product that passes through two processes: Grinding and Polishing. During December, the Grinding Department transferred 20,000 units to the Polishing Department. The cost of the units transferred into the second department was $40,000. Direct materials are added uniformly in the second process. Units are measured the same way in both departments.

The second department (Polishing) had the following physical flow schedule for December:

Units to account for:
Units, beginning work in process	4,000	(40% complete)
Units started	?
Total units to account for	?
Units accounted for:
Units, ending work in process	8,000	(50% complete)
Units completed	?
Units accounted for	?

Costs in beginning work in process for the Polishing Department were direct materials, $5,000; conversion costs, $6,000; and transferred in, $8,000. Costs added during the month: direct materials, $32,000; conversion costs, $50,000; and transferred in, $40,000.

Required:

1. Assuming the use of the weighted average method, prepare a schedule of equivalent units. Enter percentages as whole numbers.

Fordman Company
Schedule of Equivalent Units
For the month of December

	Direct Materials	Conversion Costs	Transferred In
Units completed
Ending WIP:
x %
x %
Total equivalent units

2. Compute the unit cost for the month. If required, round your answer to the nearest cent.
$ per equivalent unit

Answer 1

• [1]

	Direct Materials	Conversion Costs	Transferred In
Units completed [4000 + 20000 – 8000]	16,000	16,000	16,000
Ending WIP:
8000 x 100%			8000
8000 x 50% %	4000	4000
Total equivalent units	20,000	20,000	24,000

• [2]

>Material = (5000 + 32000) / 20000 units = $ 1.85
>Conversion Cost = (6000 + 50000) / 20000 units = $ 2.80
>Transferred in = (8000 + 40000) / 24000 units = $ 2

Unit Cost = 1.85 + 2.80 + 2 = $ 6.65 per equivalent unit