Weighted Average Method, Unit Costs, Valuing Inventories Walser Inc. produces a

Question

Weighted Average Method, Unit Costs, Valuing Inventories

Walser Inc. produces a product that passes through two processes. During February, equivalent units were calculated using the weighted average method:

The costs that Walser had to account for during the month of February were as follows:

1. Using the weighted average method, determine unit cost. If required, round your answer to the nearest cent and use rounded amount in subsequent requirements.

2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory? If required, round your answers to the nearest dollar.

Cost of units transferred out: $

Cost of ending inventory: $

Units completed 200,000 Add: Units in EWIP X Fraction complete: (57,930 X 30%) 17,379 Equivalent units of output (weighted average) 217,379 Less: Units in BWIP X Fraction complete: (20,000 X 80%) 16,000 Equivalent units of output (FIFO) 201,379

Explanation / Answer

1) Unit cost $       6.49 Working: As per Weighted Average Method: Unit Cost = Total Cost/Total Equivalent units of output = $       14,10,790 /              2,17,379 = $                  6.49 2) Cost of units transferred out $       12,98,000 Cost of ending inventory $          1,12,790 Working: Cost of units transferred out = Units transferred out x Unit Cost =              2,00,000 x $       6.49 = $       12,98,000 Cost of ending inventory = Equivalent ending units x Cost per equivalent unit = 17379 x $       6.49 = $          1,12,790

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