Helix Corporation produces prefabricated flooring in a series of steps carried o

Question

Helix Corporation produces prefabricated flooring in a series of steps carried out in production
departments. All of the material that is used in the first production department is added at the
beginning processing in that department. Data for May for the first production department
follow:

Percent Completed
Units Materials Conversion
Work in process inventory, May 1 ……………… 5,000 100% 40%
Work in process inventory, May 31 ……………. 10,000 100% 30%

Materials in work in process inventory, May 1 $1,500
Conversion cost in work in process inventory, May 1 $4,000
Units started into production 180,000
Units transferred to the next production department 175,000
Materials cost added during May $54,000
Conversion cost added during May $352,000

a) Assume that the company uses the weighted-average method of accounting for units and costs.
Determine the equivalent units for May for the first process.
b) Compare the costs per equivalent unit for May for the first process.
c) Determine the total cost of ending work in process inventory and the total cost of units
transferred to the next process in May.

Explanation / Answer

Solution: 1. The equivalent units for May for the first process. Materials Conversion Equivalent units of production 185,000 178,000 Working Notes: Weighted-Average Method Materials Conversion Units transferred to the next production department 175,000 175,000 Add: Ending work in process: Material: 10,000 units x 100% complete 10,000 Conversion: 10,000 units x 30% comp. 3000 Equivalent units of production 185,000 178,000 Notes: In Weighted-Average Method, Equivalent units of production calculated as sum of unit complete and transferred and Ending WIP equivalent units 2. Costs per equivalent unit for May for the first process. Materials Conversion Cost per equivalent unit 0.30 2.00 Working Notes: Materials Conversion Cost of beginning work in process $1,500 $4,000 I Cost added during the period $54,000 $352,000 II Total Cost (a) $55,500 $356,000 III=I+II Equivalent units of production (b) 185,000 178,000 IV [calculation done in 1.] Cost per equivalent unit   (a/b) 0.30 2.00 V=III/IV [$55,500/185,000] [$356,000/178,000] 3. Materials Conversion Total a. Cost of ending work in process inventory 3000 6000 9000 b. Materials Conversion Total Cost of units completed and transferred out 52,500 350,000 402,500 Working Notes: a. Materials Conversion Total Ending WIP Inventory equivalent units 10,000 3,000 [calculated in 1.] Cost per equivalent unit    0.30 2.00 Cost of ending work in process inventory 3000 6000 9000 [10,000 x 0.30 ] [3,000 x 2 ] b. Materials Conversion Total Units completed and transferred Units transferred to next 175,000 175,000 Cost per equivalent unit    0.30 2.00 Cost of ending work in process inventory 52,500 350,000 402,500 [175000 x 0.30 ] [175000 x 2 ] Please feel free to ask if anything about above solution in comment section of the question.

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