Victory Company uses weighted-average process costing to account for its product

Question

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 720,000 units of product to finished goods. At the end of November, the work in process inventory consists of 203,000 units that are 50% complete with respect to conversion. Beginning inventory had $479,960 of direct materials and $205,375 of conversion cost. The direct material cost added in November is $3,212,040, and the conversion cost added is $3,902.125. Beginning work in process consisted of 71,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 71,000 were from beginning work in process and 649,000 units were started and completed during the period. Required 1. Determine the equivalent units of production with respect to direct materials and conversion. Equivalent Units of Production (EUP)-Weighted Average Method EUP Conversion Units % Materials EUP-Materials % Conversion Total units

Explanation / Answer

1. Equivalent Units statement Material Conversion Particulars Units Output % complete Equiv. Units % complete Equiv. Units Opening WIP Input Finished Goods 720000 100% 720000 100% 720000 Closing WIP 203000 100% 203000 50% 101500 Total Units 923000 923000 821500 2. Statement Showing cost per Equivalent unit of production Material Conversion Opening Cost of WIP 479960 205375 Current cost 3212040 3902125 Total Cost 3692000 4107500 Divide Equivalent unit of production 923000 821500 Cost per Equiv Unit 4 5 3. Statement of Total Cost Cost of Units transferred out: EUP Cost per EUP Total Cost Direct material 720000 4 2880000 Conversion cost 720000 5 3600000 Total Cost of units transferred 6480000 Cost of Ending WIP: EUP Cost per EUP Total Cost Direct material 203000 4 812000 Conversion cost 101500 5 507500 Total Cost of Ending WIP 1319500 Total Cost accounted for 7799500

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