Question

A manufacturer uses the weighted average method in its single department processing costing environment to account...

A manufacturer uses the weighted average method in its single department processing costing environment to account for product costs. Given the following data for May of the current year, explain how the company would calculate the cost to manufacture one unit of product in April of the current year using only the following data. Answer using only words.

Work in Process on 5.1

10,000 units, 100% complete with respect to direct materials, 30% complete with respect to conversion

Costs in Work in Process on 5.1

$30,000 in direct material costs and $1,850 in conversion costs
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Answer #1

Cost to manufacture one unit of product in April can be calculated by beginning work in process units and costs of beginning work in process. It is calculated by dividing cost of beginning work in process by equivalent units in beginning work in process.

Manufacturing Cost per unit = Cost per unit for Material + Cost per unit for Conversion

Cost per unit = Cost of Work in Process / Equivalent units of Production in ending WIP

Cost per unit for Material = $30000 / (10000 x 100%) = $3 per unit
Cost per unit for Material = $1850 / (10000 x 30%) = $0.62 per unit

Manufacturing Cost per unit = $3 + $0.62 = $3.62 per unit

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