Victory Company uses weighted-average process costing to account for its product
ID: 2483743 • Letter: V
Question
Victory Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 790,000 units of product to finished goods. At the end of November, the goods in process inventory consists of 183,000 units that are 50% complete with respect to labor. Beginning inventory had $442,715 of direct materials and $220,375 of direct labor cost. The direct material cost added in November is $2,962,785, and the direct labor cost added is $4,187,125.
Victory Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During November, the company transferred 790,000 units of product to finished goods. At the end of November, the goods in process inventory consists of 183,000 units that are 50% complete with respect to labor. Beginning inventory had $442,715 of direct materials and $220,375 of direct labor cost. The direct material cost added in November is $2,962,785, and the direct labor cost added is $4,187,125.
Compute both direct labor cost and direct materials cost assigned to units completed and transferred out and ending goods in process inventory. (Round "Cost per EUP" to 2 decimal places.)Explanation / Answer
Answer Computation of direct material and labour cost assignment to units completed and transferred out and ending goods in process inventory Cost of units transferred out : EUP Cost per EUP Total Cost Direct Material 790000 $3.50 $27,65,000.00 Direct Labour 790000 $5.00 $39,50,000.00 Total Cost transferred out $67,15,000.00 Cost of ending goods in process EUP Cost per EUP Total Cost Direct Material 183000 $3.50 $6,40,500.00 Direct Labour 91500 $5.00 $4,57,500.00 Total Cos of ending goods in process $10,98,000.00 Total Cost accounted for $78,13,000.00 Calculation of Equivalent units of production Total Units % of completion with respect to material Equivalent units of production % of completion with respect to labour Equivalent units of production Units transferred to Finished Goods 790000 100% 790000 100% 790000 Units in ending work in process 183000 100% 183000 50% 91500 Total EUP 973000 881500 Calculation of Cost per Equivalent Unit Direct Materal Labour Opening Work in process $4,42,715 $2,20,375 Cost added during the period $29,62,785 $41,87,125 Total Cost $34,05,500 $44,07,500 Equivalent Units of production 973000 881500 Cost per EUP $3.50 $5.00
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