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Homework answers / question archive / Superior Micro Products uses the weighted-average method in its process costing system
Superior Micro Products uses the weighted-average method in its process costing system. During January, the Delta Assembly Department completed its processing of 26,100 units and transferred them to the next department. The cost of beginning work in process inventory and the costs added during January amounted to $720,752 in total. The ending work in process inventory in January consisted of 2,600 units, which were 80% complete with respect to materials and 60% complete with respect to labor and overhead. The costs per equivalent unit for the month were as follows:
| Materials | Labor | Overhead | |||||||
| Cost per equivalent unit | $ | 13.70 | $ | 4.70 | $ | 7.40 | |||
Required:
1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.
2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.
3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.
4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)
Answer:
1. Compute the equivalent units of materials, labor, and overhead in the ending work in process inventory for the month.
| Whole unit | % material | EUP-material | % labour | EUP-labour | % overhead | EUP-overhead | |
| Ending work in process | 2600 | 80% | 2080 | 60% | 1560 | 60% | 1560 |
2. Compute the cost of ending work in process inventory for materials, labor, overhead, and in total for January.
| Material | Labour | overhead | Total | |
| Cost of ending work in process | 2080*13.70 = 28496 | 1560*4.7 = 7332 | 1560*7.4 = 11544 | 47372 |
3. Compute the cost of the units transferred to the next department for materials, labor, overhead, and in total for January.
| Material | Labour | Overhead | Total | |
| Cost of units transferred out | 26100*13.7 = 357570 | 122670 | 193140 | 673380 |
4. Prepare a cost reconciliation for January. (Note: You will not be able to break the cost to be accounted for into the cost of beginning work in process inventory and costs added during the month.)
| Total cost to be accounted for | 720752 |
| Cost accounted as | |
| Cost of units transferred out | 673380 |
| Cost of ending work in process | 47372 |
| Total cost accounted as | 720752 |
