Problem 202A Weighted average Cost per equivalent unit costs

Problem 20-2A Weighted average: Cost per equivalent unit; costs assigned to products LO C2, C3

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Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 795,000 units of product to finished goods. At the end of November, the work in process inventory consists of 202,000 units that are 70% complete with respect to conversion. Beginning inventory had $259,220 of direct materials and $117,050 of conversion cost. The direct material cost added in November is $1,734,780, and the conversion cost added is $2,223,950. Beginning work in process consisted of 70,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 70,000 were from beginning work in process and 725,000 units were started and completed during the period.

Required:
1. Determine the equivalent units of production with respect to direct materials and conversion.

2. Compute both the direct material cost and the conversion cost per equivalent unit.

3. Compute the direct material cost and the conversion cost assigned to units completed and transferred out and ending work in process inventory. (Round \"Cost per EUP\" to 2 decimal places.)

Solution

1 Statement of Equivalent Production Particulars Units Units MATERIAL Coversion % UNITS % UNITS Beginning WIP & transferred 70000 70000 0 0 20 14000 Introduced 927000 0 PROCESSED AND TRANSFERRED 725000 100 725000 100 725000 WORK IN PROCESS 202000 100 202000 70 141400 EQUIVALENT UNITS 997000 997000 927000 880400 2 Cost per unit of Equivalent units Particulars Total Cost No of Units Cost per Unit Material 1734780 927000 1.87 Conversion Cost 2223950 880400 2.53 Total 4.40 3 Calculation of Cost Particulars Units Cost Per Unit Total Cost Unit completed and transferred 725000 4.40 3188158 Work in progress(202000*1.87+141400*2.53) 735482