O\'Callahan Snack Company produces gourmet chips and other snack foods. One of t

Question

O'Callahan Snack Company produces gourmet chips and other snack foods. One of the company's most popular snacks is a combination of several varieties of organic potatoes. The snack food goes through several processes, including a potato-peeling operation. Costs for operations during April are as follows (note: production costs include the cost of direct materials and conversion costs for the department): Assume that O'Callahan Snack Company used the weighted-average method of process costing.

A. How many equivalent units did O'Callahan complete during April?

B. Calculate the cost of the ending work in process inventory. In your calculations, round the cost per equivalent unit to two decimal places. Round your final answer to the nearest dollar.

Explanation / Answer

A. Equivalent units (Weighted Average method)

Units completed = 3000 + 20000 - 5000 = 18,000 Units

Ending Inventory = 5000 * 85% = 4,250 Units

Total Equivalent Unit = 22,250

B. Cost of Ending Work in Process Inventory

Cost per equivalent Unit = (10,000 + 70,240) / 22,250 = $3.61 per Unit

Cost of Ending work in process inventory = 4250 * 3.61 = 15,343

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