Question

Weston Products manufactures an industrial cleaning compound that goes through three processing departments-Grinding, Mixing. and Cooking All raw materials are introduced at the start of work in the Grinding Department. The Work in Process T-account for the Grinding Department for May is given below: 

Answer 1

1) Under weighted average method, equivalent units are to be calculated only for units completed & transferred out and units lying as ending work in process as it is assumed that the units once entered into the process become integral part of total units and no segregation between units transferred from beginning work in process and introduced during current process. Conversion cost includes Labor + Overheads. So, Physical units of production: Units in beginning inventory Add: Units started during current period Less: Units in ending inventory Units completed and transferred out 134,000 349,000 -47,000 436,000 Particulars Whole Units Materials Completed and transferred Ending work in process Equivalent Units of Production (EUP) 436,000 47,000 483,000 100% 100% EUP- Materials 436,000 47,000 483,000 % EUP- Conversion Conversion 100% 436,000 70% 32,900 468,900 [436000 units x 100%; 436000 units x 100%] [47000 units x 100%; 47000 units x 70%] 2) Cost per equivalent units of production Cost of beginning work in process Cost added during the period Total Costs Divided by Equivalent units of Production (EUP) Cost per Equivalent units of Production Materials Conversion $300,160 $191,620 $859,040 $535,175 $1,159,200 $726,795 483,000 468,900 [As computed EUP schedule presented above] $2.40 $1.55 ($1159200 / 483000 units = $2.4; $726795 / 468900 units = $1.55]

3) Cost of ending work in process EUP Totals Cost per EUP $2.400 $1.550 Materials Conversion Total Cost of ending work in process 47,000 32.900 $112,800 [47000 units x $2.4] $50,995 [32900 units x $1.55] $ 163,795 4) Cost of goods completed & transferred EUP Totals Cost per EUP $2.400 $1.550 Materials Conversion Total Cost of goods completed & transferred out 436,000 436,000 $1,046,400 [436000 units x $2.4] $675,800 [436000 units x $1.55] $1,722,200