Talamoto Co. manufactures a single product that goes through two processes — mix
ID: 2482512 • Letter: T
Question
Talamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September. Work-in-process inventory, September 1 31,800 units Conversion - 70% completed Work-in-process inventory, September 30 20,000 units Conversion - 50% completed Units started into production 70,800 units Units completed and transferred out ? Costs: Work-in-process inventory, September 1 Material P $78,000 Material Q $103,200 Conversion $138,721 Cost added during September Material P $179,000 Material Q $164,600 Conversion $355,980 Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process. Cost per equivalent unit for conversion under the weighted-average method is calculated to be: A) $5.06 B) $2.32 C) $2.50 D) $5.34 E) $2.61 Talamoto Co. manufactures a single product that goes through two processes — mixing and cooking. The following data pertains to the Mixing Department for September. Work-in-process inventory, September 1 31,800 units Conversion - 70% completed Work-in-process inventory, September 30 20,000 units Conversion - 50% completed Units started into production 70,800 units Units completed and transferred out ? Costs: Work-in-process inventory, September 1 Material P $78,000 Material Q $103,200 Conversion $138,721 Cost added during September Material P $179,000 Material Q $164,600 Conversion $355,980 Material P is added at the beginning of work in the Mixing Department. Material Q is also added in the Mixing Department, but not until units of product are forty percent completed with regard to conversion. Conversion costs are incurred uniformly during the process. Cost per equivalent unit for conversion under the weighted-average method is calculated to be: A) $5.06 B) $2.32 C) $2.50 D) $5.34 E) $2.61Explanation / Answer
Solution:
Correct Answer is D) $5.34
Calculation of Units completed and transferred out during the month
Beginning Work in process inventory
31,800 Units
Add: Units Started into production during the month
70,800 Units
Less: Ending Work in Process Inventory
20,000 Units
Units Completed and Transferred out during the month
82,600 Units
Weighted Average Method
Calculation of Equivalent Production Units with respect to Conversion
Units
Conversion
% Completion
Equivalent Unit
Units Completed and Transferred out
82,600
100%
82,600
Ending Work in Process Inventory, Sept 30
20,000
50%
10,000
Total Equivalent Production Unit
92,600
Calculation of cost per equivalent production unit with respect to Conversion:
Cost Per Equivalent Production Unit for Conversion = Total Conversion Cost / Total Equivalent Production Unit for Conversion
Total Conversion Cost = Beginning Inventory Cost + Cost Added during the month
= $138,721 + $355,980
= $494,701
Cost Per Equivalent Production Unit for Conversion = $494,701 / 92,600 = $5.34 per equivalent unit
Beginning Work in process inventory
31,800 Units
Add: Units Started into production during the month
70,800 Units
Less: Ending Work in Process Inventory
20,000 Units
Units Completed and Transferred out during the month
82,600 Units
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