Alpha company has the following information: WIP 1/1/17- 100,000 units, Units St

Question

Alpha company has the following information: WIP 1/1/17- 100,000 units, Units Started into production - 575,000 units, WIP 12/31/17- 75,000 units, Direct material put into production- $575,000, Conversion costs put into production $843,750. The beginning WIP was 100% complete as to direct materials and 75% as to conversion costs. The ending WIP was 100% complete as to direct materials and 50% complete as to conversion costs. The beginning work in process consisted of: Direct material- $943,750, Conversion costs- $303,750. Alpha Company uses weighted average method. 1) the equivalent units of production for direct materials 2) the cost per equivalent unit for materials 3) the equivalent units of production for conversion 4) the cost per equivalent unit for conversion. 5) the cost that should be assigned to Alpha work in process inventory at the end of FY2017.

Explanation / Answer

1 Equivalent units of production for direct materials =100000+575000=675000 2 Cost per equivalent unit for materials=(575000+943750)/675000= $2.25 3 Equivalent units of production for conversion=600000+(75000*50%)= 637500 4 Cost per equivalent unit for conversion=(843750+303750)/637500= $1.8 5 Work in process inventory at the end of FY2017=(75000*2.25)+(37500*1.8)= $236250

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