Exercise 1612 Weighted average Completing a process cost sum

Exercise 16-12 Weighted average: Completing a process cost summary LO C3 The following partially completed process cost summary describes the July production activities of Ashad Company. Its production output is sent to its warehouse for shipping. All direct materials are added to products when processing begins. Beginning work in process inventory is 20% complete with respect to conversion. Direct 32,500 2,600 32,500 35,100 34,060 Equivalent Units of Production Materials Conversion Units transferred out Units of ending work in process 1,560 Equivalent units of production Direct Materials Costs per EUP Costs of beginning work in process Costs incurred this period 19,000 $ 2,325 402,200 181,599 Total costs 421,200 $183,924 Units in beginning work in process (all completed during July) Units started this period Units completed and transferred out Units in ending work in process 2,100 33,000 32,500 2,600

Solution

calculation of equivalent units

DIRECT MAT CONVERSION COST

Transfer 32500 32500

doc(%) 100 100

closing wip 2600 2600

doc(%) 100 60

total eq units 35100 34060

COST PER EQUIVALENT UNITS

D.MAT($) CONVERSION COST($)

OPENING WIP 19000 2325

TRANSFERRED 402200 181599

TOTAL 421200 183924

EQ UNITS 35100 34060

COST / EQ UNITS 12 5.4

CALCULATION OF COST OF UNITS TRANSFERRED OUT = (12+5.4) * 32500= $565500

CALCULATION OF WORK IN PROCESS AS ON 31ST JULY (CLOSING )

D.MAT CONVERSION COST TOTAL

UNITS 2600 2600

DEGREE OF COM(%) 100 60

EQ UNITS 2600 1560

COST/EQ UNITS 12 5.4

COST($) 31200 8424 39624