O\'Leary Company manufactures Product Z in a two-stage production cycle in Depar

Question

O'Leary Company manufactures Product Z in a two-stage production cycle in Departments A and B. Materials are added at the beginning of the process in Department B. O'Leary uses the weighted average method. Conversion costs for Department B were 40% complete a to h e 500 in the beginning work in process IP inventory and 50% complete as to the 6 300 units in the ena ng work in rocess enton 9000 units lwere completed and transferred out of Department B during October. An analysis of the costs relating to work-in-process inventories and production activity in Department B for October follows: s __---- Transferred Materials Costs Conversion in Costs Costs WIP October 1 Costs added in October $9,000 $21,800 $2,600 $5,100 $900 $3,600 The total cost per equivalent unit transferred-out for October of Product Z, rounded to the nearest penny, was:

Explanation / Answer

Weighted average cost Beggining units 4500 Transferred out 9,000 Started intro production 10800 Ending units 6,300 15300 15300 Equivalent units Trasferred in Material Conversion cost Units transferred                      A 9000 9000 9,000 Ending Units 6,300 6,300 6,300 Completion 100% 100% 50% B 6300 6300 3150 Total units 15300 15300 12150 Cost per equivalent units Particulars Trasferred in Material Conversion cost As at beginning 9000 2600 900 12500 Added during the month 21800 5100 3600 30500 Cost to be accounted for 30800 7700 4500 Total eqivalent units 15300 15300 12150 Cost per equivalent unit 2.01 0.50 0.37 2.89 Cost per equivalent unit = Cost to be accounted for / Total equivalent units

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