7. Springville Company, which uses the weighted average method, produces a produ

Question

7. Springville Company, which uses the weighted average method, produces a product that passes through two departments: Blending and Cooking. In the blending department, all materials are added at the beginning of the process. All other manufacturing inputs are added uniformly. The following information pertains to the blending department for February:

a. BWIP, February 1: 100,000 pounds, 40 percent complete with respect to conversion costs. The costs assigned to this work are as follows:

Materials $20,000

Labor 10,000

Overhead 30,000

b. EWIP, February 28: 50,000 pounds, 60 percent complete with respect to conversion costs.

c. Units completed and transferred out: 370,000 pounds. The following costs were added during the month:

Materials $211,000

Labor 100,000

Overhead 270,000

Required:

a. Compute the cost per equivalent unit.

b. Compute the cost of goods transferred out and the cost of EWIP

Explanation / Answer

Springville Company All Amounts in $ a. Cost per equivalent unit No. of equivalent units (in pounds) No.of units Conversion Total Costs % Units Units completed Opening WIP 100000 60% 60000 60000 Units transferred 370000 100% 370000 370000 Closing WIP 50000 60% 30000 30000 No. of Equivalent Units 400000 Costs incurred Materials Labour Overhead Total Opening WIP Costs 20000 10000 30000 60000 Costs incurred during the month 211000 100000 270000 581000 Total Costs 231000 110000 300000 641000 Cost per Equivalent Unit 1.6025 $ per unit b. Cost of Goods transferred out 592925 $ Cost of Closing WIP 48075 $

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