Question

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davids on Factory uses the weighted -average method of inventory costing. Beginning Work in Process inventory: Physical units ....................................................................... 5,000 units % complete for materials ..................................................... 70% % complete for labor and overhead ..................................... 25% Materials co st from May ...................................................... $7,350 Labor and overhead cost from May ...................................... $3,125 Product started and completed: Physical units ....................................................................... 40,000 units Ending Work in Process inventory: Physical units ....................................................................... 4,000 units % complete for mater ials ..................................................... 40% % complete for labor and overhead ...................................... 10% Manufacturing costs for June: Materials ............................................................................... $96,975 Labor and overhead ................................................ $79,470 Required:

1. Compute equivalent units for direct materials and conversion costs: EUP for DM_____ units, EUP for conversion _____ units.

2.Compute costs per equivalent units for direct materials and conversion costs: Cost per EUP for DM $____ ; Cost per EUP for conversion costs $____

3.Compute the total costs of units completed and transferred out to finished goods during June. Total costs assigned to units completed and transferred out $____

4. Compute total cost of the ending work process Inventory. Direct material cost assigned to ending WIP $______, Conversion costs assigned to ending WIP $_____, And therefore total costs assigned to ending WIP $____

Answer 1

1) Unit transferred out = 5000+40000-4000 = 41000 Units

Equivalent unit of direct material = 41000+(4000*40%) = 42600

Equivalent unit of conversion = 41000+(4000*10%) = 41400

2) Cost per equivalent unit

Direct material = (7350+96975)/42600 = 2.45

Conversion Cost = (3125+79470)/41400 = 2.00

3) Total Cost of units completed and transferred out = 4.45*41000 = 182450

4) Direct material Cost assigned to ending WIP = 1600*2.45 = 3920; Conversion Cost = 400*2 = 800; Therefore total Cost assigned to ending WIP = 4720