Paradise Inc. uses the weighted-average method in its process costing system. Th
ID: 2539449 • Letter: P
Question
Paradise Inc. uses the weighted-average method in its process costing system. The following data concern the operations of the company's first processing department - Cutting - for a recent month.
Work-in-process, beginning:
Units in process
100
Percent complete with respect to materials
70
%
Percent complete with respect to conversion
80
%
Costs in the beginning inventory:
Materials cost
$
525
Conversion cost
$
1,696
Units started into production during the month
11,000
Units completed and transferred out
10,700
Costs added to production during the month:
Materials cost
$
83,405
Conversion cost
$
223,606
Work-in-process, ending:
Units in process
400
Percent complete with respect to materials
50
%
Percent complete with respect to conversion
20
%
Required:
Using the weighted-average method:
Determine the equivalent units of production for materials and conversion costs.
Determine the cost per equivalent unit for materials and conversion costs.
Determine the cost of units transferred out of the department during the month.
Determine the cost of ending work-in-process inventory in the department.
Work-in-process, beginning:
Units in process
100
Percent complete with respect to materials
70
%
Percent complete with respect to conversion
80
%
Costs in the beginning inventory:
Materials cost
$
525
Conversion cost
$
1,696
Units started into production during the month
11,000
Units completed and transferred out
10,700
Costs added to production during the month:
Materials cost
$
83,405
Conversion cost
$
223,606
Work-in-process, ending:
Units in process
400
Percent complete with respect to materials
50
%
Percent complete with respect to conversion
20
%
Explanation / Answer
Units completed and transfer = 10700 Units
1. Computation of Equivalent units of production
Material
Conversion cost
Completed and Transfered
10700
10700
Ending Inventory
200
80
Total Equivalent Units
10900
10780
2. Computation of the cost per equivalent unit
BI (costs)
+ Started (Costs)
/ Equivalent Units
= Unit Cost
Materials
525
83405
10900
7.70
Conversion cost
1696
223606
10780
20.90
Total unit cost
28.60
3. Cost of Ending work in process inventory and units transferout.
Cost of Ending work in process inventory
Material
200*7.70
1540
Conversion cost
80*20.90
1672
Total Cost of Ending work in process inventory
3212
Cost of Units Transfer out
10700*28.60
306020
Material
Conversion cost
Completed and Transfered
10700
10700
Ending Inventory
200
80
Total Equivalent Units
10900
10780
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