The costs per equivalent unit of direct materials and conversion in the Bottling

Question

The costs per equivalent unit of direct materials and conversion in the Bottling Department of Rocky Springs Beverage Company are $2.40 and $0.65, respectively. The equivalent units to be assigned costs are as follows: Equivalent Units Direct Materials Conversion Inventory in process, beginning of period 0 2,700 Started and completed during the period 54,000 54,000 Transferred out of Bottling (completed) 54,000 56,700 Inventory in process, end of period 7,000 3,500 Total units to be assigned costs 61,000 60,200 The beginning work in process inventory had a cost of $1,670. Determine the cost of completed and transferred-out production and the ending work in process inventory. If required, round to the nearest dollar.

Explanation / Answer

Solution:

According to weighted average cost method, the cost of opening work-in-progress and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed units. The equivalent production in this case consists of work-load already contained in opening work-in-process and work-load of current period. The units of opening work in progress and their cost are taken in full under this method. Under this method the closing stock of Work In Process is valued at total cost (including opening work in process cost)

Cost of Completed and transferred out production = (Completed Equivalent Units for direct material x costs per equivalent unit of direct materials) + (Completed Equivalent Units for Conversion x costs per equivalent unit of Conversion)

= (54,000 Units x $2.40) + (54,000 Units x $0.65)

= $129,600 + $35,100

= $164,700

Cost of the ending work in process inventory = Ending WIP Equivalent units for direct material x costs per equivalent unit of direct materials) + (Ending WIP Equivalent units for Conversion x costs per equivalent unit of Conversion)

= (7,000 x $2.40) + (3,500 x $0.65)

= $16,800 + $2,275

= $19,075

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.