Consider the following data for November 2014 from Walton Manufacturing Company,

Question

Consider the following data for November 2014 from Walton Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of theprocess, and conversion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value. Walton Manufacturing Company uses the weighted-average method of process costing.

Requirement

Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

Physical Units Direct Conversion (Pennants) Materials Costs S1,103 $711 Work in process, November 1a Started in November 2014 Good units completed and transferred out during November 2014 Normal spoilage Abnormal spoilage Work in process, November 30b Total costs added during November 2014 a Degree of completion: direct materials, 100%; conversion costs, 50%. b Degree of completion: direct materials, 100%; conversion costs, 35%. 9,200 100 20 1,900 $11,800$25,250

Explanation / Answer

Firstly we calculate the missing information ........i.e Units started in November = 11220 - 1200 = 10020

The total of finished + Normal loss + Abnormal loss + Ending WIP = 11220

Beginning Inventory = 1200

(1) Material = 11,120 Units

(2) Conversion = 10,170 Units

           Material Conversion cost Flow of production Phy Units Units % Units % Work in process ( Beginning) 1200 Units started 10020 To account for 11220 completed and transferred 9200 9200 100 9200 100 Normal spoilage 100 Abnormal spoilage 20 20 100 20 100 Work in process (ending) 1900 1900 100 950 50 To account for 11220 EQUIVALENT UNITS OF WORK DONE = 11120 10170

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