Question

Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May:

		Percent Completed
	Tons of Pulp	Materials		Conversion
Work-in-Process Inventory, May 1	5,000	100	%	50	%
Started during May	12,000
Units to account for	17,000
Units from beginning Work-in-Process, which were completed and transferred out during May	5,000
Started and completed during May	7,200
Work-in-Process Inventory, May 31	4,800	100	%	50	%
Total units accounted for	17,000

The following cost data are available:

Work-in-Process Inventory, May 1
Direct materials	$	83,640
Conversion		95,776
Costs incurred during May
Direct materials		187,680
Conversion		264,990

Required:

1. Calculate the equivalent units of direct materials and conversion during May. Use the weighted-average method.

2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the weighted-average method.

Answer 1

1.

	Physical Units
Units to be accounted for:
Beginning Work in process	5000
Started in Production	12000
Total Units to be accounted for:	17000
		Equivalent Units
Units accounted for as follows:		Materials	Conversion
Completed and transferred out	12200	12200	12200
Ending Work in process	4800	4800	2400
Total Units accounted for	17000	17000	14600

2.

	Total	Materials	Conversion
Cost to be accounted for:
Beginning work in process	179416	83640	95776
Costs incurred during May	452670	187680	264990
Total cost to be accounted for	632086	271320	360766
÷ Equivalent Units		17000	14600
Cost per Equivalent Unit $		15.96	24.71