Question

Morrison Company had the equivalent units schedule and cost information for its Sewing Department for the month of December, as shown below.

	Direct Materials		Conversion Costs
Units completed	40,000		40,000
Add: Units in ending WIP * Percentage complete:
10,000 * 100% direct materials	10,000
10,000 * 40% conversion costs			4,000
Equivalent units of output	50,000		44,000

Costs:

Work in process, December 1:

              Direct materials                                           $64,000

              Conversion costs                                            14,000

              Total WIP on Dec. 1                                     $78,000

Current costs:

              Direct materials                                           $510,000

              Conversion costs                                             184,000

              Total current costs                                      $694,000

1. Compute the cost per equivalent unit for December using the Weighted Average Method. Round your answer to the nearest cent.

2. Determine the cost of ending work in process.  

3. Determine the cost of goods transferred out.

Answer 1

	Physical units	Direct material	Conversion	Total
Units completed	40,000	40,000	40,000
Add: Ending WIP	10,000	10,000	4,000
Equivalent units [A]		50,000	44,000
Total cost to be accounted for
Opening WIP		64,000	14,000
Incurred during December		510,000	184,000
Total costs [B]		574,000	198,000	772,000
Avg cost of equivalent unit [A/B]		11.48	4.50

Cost of goods transferred out

- Material = 40,000 x 11.48 = $459,200

- Labor = 40,000 x 4.50 = $180,000

Cost of Ending WIP

- Material = 10,000 x 11.48 = $114,800

- Labor = 4,000 x 4.50 = $18,000