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Able Inc
Able Inc. uses the weighted average method in its process costing system. The following data concern the operations of the company's first processing department for a recent month. 300 60% 30% $342 $2,394 21,000 Work in process, beginning: Units in process Percent complete with respect to materials Percent complete with respect to conversion Costs in the beginning inventory: Materials cost Conversion cost Units started into production during the month Units completed and transferred out Costs added to production during the month: Materials cost Conversion cost Work in process, ending: Units in process Percent complete with respect to materials Percent complete with respect to conversion 20,700 $44,136 $546,750 600 80% 30% Required: a. Determine the equivalent units of production. (10 marks) b. Determine the costs per equivalent unit. (10 marks) c. Determine the cost of ending work in process inventory. (5 marks) d. Determine the cost of the units transferred to the next department. (5 marks)
Expert Solution
a. Statement of Equivalent units of production (Weighted Average Method)
| Particulars | Units | Particulars | Units | Material Cost (% of Completion) | Equivalent Units | Conversion Cost (% of Completion) | Equivalent Units | |||||
| Beginning Work in Process | 300 | Transferred Out | 20,700 | 100 | 20,700 | 100 | 20,700 | |||||
| New Production | 21,000 | Ending Work in Process | 600 | 80 | 480 | 30 | 180 | |||||
| Total Units | 21,300 | 21,300 | 21,180 | 20,880 |
b. Statement of costs per equivalent unit
|
Particulars |
Total Cost($) (A) |
Equivalent Units (B) |
Cost Per Equivalent Units($) (A/B) |
|
Material Cost
|
44,478 (342+44,136) |
21,180
|
2.1 |
|
Conversion Cost |
549,144 (2,394+546,750) |
20,880 | 26.3 |
c. Cost of Ending Work in Process
| Particulars | Material Cost($) | Conversion Cost($) | Total Cost($) |
|
Ending Work in Process (Equivalent Units * Cost Per Equivalent Units) |
1,008 (480*2.1) |
4,734 (180*26.3) |
5,742
|
d. Cost of units Transferred
| Particulars | Material Cost($) | Conversion Cost($) | Total Cost($) |
|
Unit Transferred (Equivalent Units * Cost Per Equivalent Units) |
43,470 (20,700*2.1) |
544,410 (20,700*26.3) |
587,880 |
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