Question

The assembly division of Quality Time Pieces Ltd uses the weighted-average method of process costing. The following data relate to the month of February

	Physical units of output	Direct materials	Conversion costs
Beginning work-in-process (direct materials, 80%; conversion costs, 35%).	140	$ 600,000	$ 300,000
Started in Feb 2019	510
Completed during Feb 2019	450
Ending work-in-process (direct materials, 100%; conversion costs, 50%).	?
Total costs added during Feb 2019		$ 3,300,000	$ 1 900,000

Required

Using the weighted average method, prepare the following

1. Calculate equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.
2. Summarise the total costs to account for, calculate the cost per equivalent unit for direct materials and conversion costs, and assign costs to the units completed (and transferred out) and units in ending work-in-process.

Answer 1

Physical units of quality time Pieces ltd assembly department

Particulars	physical units
Beginning work in process	140
Started units	510
Total units to be accounted	650
Number of units completed and transferred out	450
Number of units in ending work in process	200
Total units to be accounted	650

Equivalent unit of material

= 450 + 200 = 650 units

Equivalent unit of conversion cost

= (200 × 50%) + 450 = 550 units

Cost per equivalent unit of conversion

= (1,900,000 + 300,000) / 550 = $4,000

Cost per equivalent unit of material

= (3,300,000 + 600,000) / 650 = $6,000

Cost assigned to ending inventory

= (200 × 6,000) + (100 × 4,000) = $1,600,000

Cost allocated to units completed and transferred out

= (450 × 6,000) + (450 × 4,000) = $4,500,000

$4,500,000 is allocated to units completed and transferred out.